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THE GAP BETWEEN spending and taxation means that tough policy decisions will have to be made in post-bailout Ireland regardless of the level of monitoring by the Troika.
That is according to Minister of State for EU Affairs Paschal Donohoe who says that Government must now remain aware of the impact decisions will have on the cost of borrowing.
Speaking to TheJournal.ie, Donohoe says that since we have now chosen to leave the bailout without a precautionary credit line, we must keep borrowing rates low:
Even if we were in an environment where we did not have the arrangements that we’re talking about. Because of the need that we will have to borrow in the future to fund the gap between our spending and taxation, we would need to take a set of decisions anyway to allow us to borrow at rates that we can afford.
Donohoe says that the Government has been aware of this fact during consultations with bailout partners in Europe and the United States. He says that talks with potential investors in Irish debt formed an important part of the decision taken by the Government to go it alone from the middle of next month:
We looked at the input that we had received from the consultation round that we’re referring to, discussed the different options with people who would be buying our debt in the future, who would be experts in how our economy would perform after the exited the bailout.
Ireland will leave the Troika’s three year bailout programme on 15 December, but as they themselves have pointed out, the the EU, IMF and ECB will keep Ireland “under a close watch”.
Donohoe says however that this will be far less stingent than what pertained under the programme.
“The Troika were actually involved in how decisions were made, the micro level of detail regarding how government was run.
“What we’re now going to moving to now is an environment in which people are going to be looking at the consequences of decisions rather than being involved in making the decisions with us.”
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