THE GOVERNMENT has secured concessions from the troika that some proceeds from an “ambitious” programme of State asset sales will be reinvested in the economy and not just used to pay down debts.
At the most recent review of the bailout last month, the Government had said it had managed to negotiate with the troika that the proceeds from the sale of State assets would go towards job promotion, but the European Commission official refused to confirm whether this was the case.
The latest EU-European Central Bank-International Monetary Fund agreement, however, says that proceeds from the sale of State assets would improve competitiveness in the economy, reduce the State’s financing needs and “provide additional resources for reinvestment in the economy”.
Minister for Public Expenditure and Reform Brendan Howlin is engaging with the troika on the quantum of funds generated by the sale of State assets that can be reinvested. The Minister has said in the past he expects it to be sizeable.
Mr Howlin is bringing forward proposals to the Cabinet on potential assets for sale in the coming weeks.
“This is a step forward, it’s something the Government very much welcomes,” a spokeswoman for the Department of Public Expenditure said.
The updated memorandum of understand with the troika also shows the Government has promised to provide the troika with details of action taken against unemployed people who fail to attend activation interviews with State agencies.
In addition, the Government said its already-tough budget targets would be strengthened if necessary.
A letter signed by Minister for Finance Michael Noonan and governor of the Central Bank Patrick Honohan pointed out that the margin of error in fiscal and economic projections remained high “due mainly, but not exclusively” to international events.
“While we do not envisage that revisions will be needed, we stand ready to take any corrective actions that may become necessary to meet changing circumstances,” it stated.
The Coalition is committed to cuts of €3.8 billion this year and at least €3.5 billion in 2013 to keep on target to reduce the deficit to less than 3 per cent of gross domestic product by 2015. On employment, the Government has pledged to take steps to strengthen activation and training policies to help jobseekers get back to work.
In the area of banking reform, it agreed to prepare a proposal to deal with “Irish Life and Permanent’s vulnerabilities” by the end of this month. This is understood to be a reference to the high level of loss-making loans and heavy external funding requirements at Permanent TSB.
The documents also show the State-run banks sold and ran down €40 billion of loans last year, beating a €34.7 billion target. The two largest banks, Bank of Ireland and Allied Irish Banks, sold almost €15 billion worth of assets at “significantly better prices” than expected during stress tests in March, the Government said.
Damien English, the Fine Gael chairman of the Oireachtas Committee on Jobs, said confirmation that money raised from the sale of State assets would go towards job creation was proof the Government was continuing to successfully renegotiate the bailout deal with the troika.
Introducing the 2012 Finance Bill in the Dáil last night, Mr Noonan said Ireland was recovering from the most severe downturn in the history of the State with crises in both the public finances and the banking system.
He said the outlook was improving with the most recent data from the Central Statistics Office showing that in the first three quarters of last year, gross domestic product increased by 0.7 per cent.