Trichet urges party leaders to accept terms of EU-IMF rescue package

 

IRISH POLITICAL leaders have been urged by European Central Bank (ECB) chief Jean-Claude Trichet to proceed with the agreed terms of the EU-International Monetary Fund (IMF) rescue plan.

His comments came as Fine Gael and Labour said they want to renegotiate key elements of the deal.

Mr Trichet said the ECB view was that the execution of the rescue package was absolutely essential for Ireland’s credibility.

He was speaking to reporters in Frankfurt yesterday on the eve of a summit in Brussels at which EU leaders will discuss the possibility of reducing the interest rate charged to Ireland on bailout funds. Asked if it was realistic for Irish parties to say they will renegotiate the deal, Mr Trichet said he was reluctant to comment on the democratic process in any EU country.

“I would only say: there is a plan, the plan has been approved by the IMF, the plan has been approved by the international community, the plan has been approved by the commission in liaison with the ECB. Let’s apply the plan,” he said. He described this stance as the “very, very strong position” of the bank. “As I said earlier, apply the plan.”

In the election campaign yesterday, the three main parties clashed over their respective tax policies and whether or not Ireland is in a position to renegotiate the EU-IMF rescue package.

Minister for Finance Brian Lenihan said there was no prospect of any government being able to persuade the EU or the IMF of a wholesale revision of the deal.

He said that, as the deal expired at the end of 2013, Ireland would have to be back in the market by early 2014 at the latest but, under Labour’s plans, the national debt would still be rising. Mr Lenihan said Labour had changed its mind about bringing the budget back to near balance by 2014. “That means they want to borrow more and for longer. It’s the subprime approach to politics.” Mr Lenihan insisted Fine Gael’s claim to be a low-tax party was “bogus” and its most recent proposal brought its policies closer to Fianna Fáil. He said the universal social charge was now accepted by both Fine Gael and Labour. Neither would withdraw it, nor the €6 billion in adjustments, if they form a coalition, he added.

Fine Gael rejected the claim it was no longer a low-tax party. Party leader Enda Kenny said none of Mr Lenihan’s economic projections had stood up and he was the one Minister who could “least afford to make comments about his predictions”.

Labour leader Eamon Gilmore said his party would seek a mandate to renegotiate the EU-IMF rescue package which he described as a ‘bad deal” that would put the country in a “budgetary straitjacket” for years.

Mr Gilmore said the choice facing the electorate was to have the budget decided in Frankfurt by the ECB or by the Irish Government. He said Labour’s strategy was based on three aspirations: a renegotiation of the deal; no new income taxes for those earning under €100,000; and a fair approach to public sector spending. “We will apply the scalpel rather than the crude hatchet,” he said.

Fine Gael’s enterprise spokesman Richard Bruton clarified its approach to budgetary adjustments, saying the party proposed almost €2.60 in spending cuts for every €1 it raises in higher taxes to plug the country’s deficit.

He said that 72 per cent of the savings the party plans to make would come from spending cuts, compared to 28 per cent from tax increases.

The Green Party launched its election campaign, with leader John Gormley claiming a “unilateral renegotiation” of the IMF-EU bailout deal “just isn’t on the cards”. Restructuring was necessary but, he said, it had to be done with the agreement of EU partners.