Noonan says bailout fund could last to end of 2013

IRELAND MAY not have to go back to the market to borrow money until the end of 2013, Minister for Finance Michael Noonan has …

IRELAND MAY not have to go back to the market to borrow money until the end of 2013, Minister for Finance Michael Noonan has said.

He maintained there was enough funding in the EU-IMF bailout programme to last longer than anticipated.

His comments came in tandem with the instruction to Government departments to consider bold and unpalatable measures to ensure savings in the coming years.

The instruction to the head of each department came in a letter from the secretary general of the new Department of Public Expenditure and Reform, Robert Watt.


He suggested that new measures to achieve cost savings, including the outsourcing of services to the private sector, should be considered in the drive to get spending under control.

The letter is part of a concerted effort by the Government to stretch out the funds from the bailout programme until the end of 2013 so the country does not have to go back to the money markets before then.

A programme of privatisation of State assets to raise funds is also being examined as a matter of urgency by the Government.

A range of other options including the securitisation of future income streams is also being examined. An example of securitisation would involve investors putting up cash in return for future dividends from State companies.

Mr Noonan said yesterday Ireland had sufficient funding under the bailout programme to withstand all eventualities until the middle of 2013 but there was a strong possibility of having extra money for the second half of 2013.

He said the EU-IMF deal included a figure of €35 billion for the recapitalisation of the Irish banks but the worst-case scenario now was that €24 billion of that would be used by the banks.

Speaking on RTÉ's This Weekprogramme, he said measures designed to ensure burden-sharing with some of the bond holders meant all of the €24 billion would not be required.

He forecast the final figure would be significantly below that and given the agreement of the IMF and the EU that savings on the bank recapitalisation can be switched across to deal with the budget deficit, the funds from the programme could last until the end of 2013.

He believed the Greek government would survive the vote on its austerity plan at the end of this week and that it would be finalised in Brussels on July 11th.

The Minister said the EU authorities had specifically said that Ireland wasn’t Greece and they drew a distinction between our economy which is back in growth again and the fact that Ireland was meeting all its targets while Greece had failed to meet its targets.

“There is a consciousness about contagion but certainly the authorities I have spoken to believe they can prevent contagion spreading to Ireland and Portugal but they have some concerns about the bigger European countries and they are going to draw the line there.”

Mr Noonan said the EU had been looking at the problem in the three programme countries when in actual fact it is a problem with the euro zone itself and the euro currency. Latterly they had been seeing it in that light.

“I think what is happening at present is that Greece is going to do enough to have the additional money voted through and then their future is in their own hands.

“But we will continue to draw the distinction between Ireland and Greece. Ireland is not Greece. Our debt is way lower than Greece.

“We are back growing again. We have an open economy and we are into export-led growth and we are going to continue drawing that distinction and rely on the guarantees we are getting from Europe that there won’t be a contagion effect,” he said.

Stephen Collins

Stephen Collins

Stephen Collins is a columnist with and former political editor of The Irish Times