The Government is not linking the restructuring of the bailout terms for the former Anglo Irish Bank with the forthcoming referendum on the fiscal stability treaty, Minister of State for Public Expenditure and Reform Brian Hayes has said.
Mr Hayes said, however, the best way for Ireland to stay “fully engaged” with its European partners was for the public to vote Yes in May 31st referendum.
Speaking on RTE’s Morning Ireland programme, Mr Hayes said the troika had not yet completed a working paper on the bank debt.
While Ministers had raised the issue "continually" with European colleagues, the Minister said he had “no expectation” of an imminent deal being reached on the promissory notes issue. There were, he said, “quite a number of fences to jump” before the deal was done.
“Given the fact we have managed to renegotiate quite a bit of the original agreement and we’ve managed to get the promissory note for this year extended for quite some years, there’s an expectation that a deal will come sooner rather than later.
“But I think there’s a lot of work to be done on this. The Minister for Finance [Michael Noonan] has made it very clear from the start that this is a medium-term project.”
Mr Hayes said the first task was to make sure the troika – the IMF, the European Commission and the ECB – agreed a position on the bailout deal.
The Government would engage with the three parties when they returned to Ireland in two weeks. When that was resolved, there would have to be “a huge amount of political engagement” with the other 16 euro zone countries “to get the issue over the line”, he said.
There was “no expectation at this stage” that the issue would be resolved by the May euro zone group meeting.
The Minister said all the other countries had to agree the deal and the Taoiseach had made it very clear that Ireland was not looking for a writedown. “The whole objective is to get a longer period of time with cheaper money and to do this in a way which makes our debt position more sustainable.”
With regard to the fiscal treaty, Mr Hayes said he believed the “best way of ensuring that we can get some deal” was for the public to vote Yes.
“Because in voting Yes we are putting in place rules that need to be put in place to make sure that this crisis never happens again, and to make sure that we have access as an insurance policy if we cannot get back to the markets.
“That’s why we are asking people to vote Yes. And the issue of the ongoing renegotiation of the bailout deal is an issue upon which the Government has put a huge amount of diplomatic and political effort in over the course of the last year and we are going to continue with that work, but they are not linked.”
Mr Hayes rejected advice by the watchdog body the Irish Fiscal Advisory Council that the Government should be more ambitious in its efforts to cut its debt.
He said yesterday’s exchequer returns were very encouraging. “Not only are we on target, we are ahead of target for the first quarter of this year.”
He said, however, there could be no room for complacency. “We are coming out of a collapse situation where the economy has gone over the precipice and we have restored that stability to the public finances.”
The Department of Finance will issue its revised growth forecast for 2012 in a few weeks time. Mr Hayes said it was not “any great surprise” that there was an expectation that growth would not be as strong this year.
While he said he said he respected the fiscal council, he noted the troika position that even if Ireland’s growth was not as strong as expected in 2012, it would still be possible to hit the 8.6 per cent deficit reduction target.
“Their position is we should go more aggressively at this and have a deficit of less than 2 per cent by 2015.
“We are still sticking to our 3 per cent target by 2015 because given the fact that the economy has come from this very difficult position, we’ve got to make sure that we encourage domestic growth and encourage growth across the economy.
“If you cut too much, that growth is put at a premium and that’s something that we don’t want to do.”
