Bailout decision ‘fully supported’ by EU-IMF, says Noonan
Minister says fact Ireland is funded into 2014 was a key reason for opting against credit line
Minister for Finance Michael Noonan has said the Government’s decision to exit the bailout without a credit line is “fully supported” by European lenders and the IMF.
He said the time was right “time was right” to return to full market access unaided.
Mr Noonan, who phoned European Central Bank president Mario Draghi, European economics commissioner Olli Rehn and IMF managing director Christine Lagarde this morning ahead of the announcement, said the decision was in “the best interests of the country.”
Addressing reporters as he arrived in Brussels for a meeting of euro zone finance ministers, Mr Noonan said the key reason behind the decision was one of timing.
“We think that the time is no right for exiting the problem and that may not always be so. If we took a precautionary programme we would have to take the decision we made today next year,” the Minister said pointing out that there was no guarantee that the situation would be as benign in a year’s time.
The fact that Ireland does not have to draw on the funds next year, as it is already funded into 2014, was also a factor.”
“If we took a precautionary programme it was clear that we would not have to use it in 2014. Then the consideration would be will we take it so that we have an option of extending it,” he said.
Bond yields fell this afternoon following the announcement that Ireland has opted to make a ‘clean break’ from the programme, with 10- year government bonds gaining ground.
Asked whether the Irish banks still pose a threat to the Irish economy – a key concern particularly of the European Central Bank – Mr Noonan said there was “no evidence” that the banks need additional capital.
In particular, rising property prices meant that the value of the collateral underpinning loans in the Irish banking sector are increasing, making the need for additional capital less likely, he said.
Ireland’s decision not to opt for a precautionary credit line does not set a precedent for other countries, Mr Noonan said, noting that Portugal could decide to seek a credit line when its bailout expires in the middle of next year.
Asked about the impact of the decision on the Irish people, Mr Noonan said it was a question of sovereignty.
“We spent an awful lot of time getting our freedom and getting the authority to run our own affairs. There’s not much point in having political freedom if you do not have economic and financial freedom.”