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THE GOVERNMENT HAS today decided to go it alone and not avail of a precautionary credit facility when it exits the bailout programme next month.
In recent weeks the decision which faced the government and particularly Finance Minister Michael Noonan, who’s been seeking out the views of the EU and IMF, was whether or not Ireland should have funding available to it in the event that its cost of borrowing rises when the bailout ends on 15 December.
If the Irish government was to have accepted funding, or ‘a line of credit’ as it has been referred to, there would have been concerns about the conditions attached to having this funding available.
We have been given no detail on what those conditions might have been, but given that the government has had to operate under strict guidelines as part of the EU/IMF bailout programme in the last three years it’s fair to say that some of these conditions would have continued.
Equally it might have left the government open to accusations of bringing Ireland into a second bailout programme, which would have been a very easy and productive line of attack for the opposition parties.
So with all that in mind here are a few reasons why the government has made the decision it has…
It’s looking good out there
Unlike this statue, Irish bond yields are not creeping up
The yield on a 10-year Irish bond – i.e. the cost of borrowing money on the normal lending markets – is around 3.5 per cent which is pretty good when you consider that at their peak these bonds had a yield of nearly 15 per cent and were at around 8 per cent when we entered the bailout.
Ireland has been steadily returning to the the lending markets since 2012 with the NTMA holding a number of bond auctions that have seen high demand from investors.
For example in March, the NTMA hoped to raise €3 billion through the issuance of new 10-year bonds but actually sold €5 billion worth with lenders willing to offer up to €12 billion.
We have a bit of a back-up already
Through bond auctions and other measures the people who look after the money at the National Treasury Management Agency, the NTMA, have built-up a stockpile of €20 billion in cash reserves.
We can use this money to meet our commitments and funding costs until early 2015 which leaves Michael Noonan looking like this…
We’re hitting our targets
Having imposed a series of severe, austerity-laden budgets in the last few years the government has brought the deficit closer towards the 3 per cent of gross domestic product (GDP) target that is laid down under new EU rules.
The government is now targeting a deficit of 4.8 per cent in 2014 which is below the mandated target of 5.1 per cent.
This will ensure a primary balance and even a small surplus when the cost of servicing our loans is stripped out.
Ministers can also point to a raft of other economic data including the numbers on the Live Register falling, the economy growing (slightly) and jobs being created. That said, there are still major issues with household debt and particularly mortgage debt.
Angela Merkel and everyone else is okay with it
Michael Noonan has been touring the various offices of our Troika partners including the ECB, the European Commission and the IMF in recent weeks and all of them have given tacit endorsement to Ireland pursuing this course.
Even more importantly the German chancellor said "this was a decision for Ireland to make" according to the Taoiseach and the Germans are even hoping to help out by offering the assistance of a German development bank, KFW, to look at ways of lending to Irish SMEs.
It's a good political move
This is perhaps one of the main reasons why the government decided to go it alone.
Politically this looks great for the Fine Gael/Labour coalition in being the two parties in government that led us out of "the mess" that Fianna Fáil dragged us into, in their words.
"Historic day", "sovereignty regained", and "standing on our own two feet" will be just some of the terms we will hear in the coming weeks before 15 December when the programme ends.
When we wake up on 16 December nothing will have changed from a practical point of view for Irish citizens.
Mortgage debt will not disappear, those who are unemployed will not suddenly have jobs, those who have decided to emigrate won't suddenly cancel their plane ticket.
"It won’t mean that our economic and financial challenges are over,” Kenny said today.
But don't expect the government to let 15 December pass without noting that the Troika are gone (even though they're not really) and Ireland has regained its sovereignty.
Pics: Photocall Ireland
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The Troika have expressed their disappointment that legal fees and the high cost of hospital consultants were never tackled as per the terms of the bailout. My conspiracy theory is that a second bailout would have went for these protected sectors and a lot of influential people in Irish society didn’t want that.
There are certain sections in this country that will be protected no matter what.
Plus local elections coming.
The Legal Services Regulation Bill is currently making its way through the Oireachtas. This is the kind of bill that should not be rushed (not that any bill should be rushed) so that’s why it’s taking time. http://www.oireachtas.ie/documents/bills28/bills/2011/5811/document2.pdf
Oh and it looks like consultants have been cut too: http://www.irishtimes.com/news/health/brain-drain-warning-over-work-conditions-for-consultants-1.1559165
Ignoreland, it’s bad form to let facts get in the way of a rant.
blowing your trumpet while children and people starve……. Enda shame on you
Firstly, it’s NOT a Bail out. It’s a loan.
And it had a term to run which is up now. So Enda Kenny is not some kind of hero for getting us out of the EU/IMF intervention. The EU/IMF set the terms of the loan and told the Irish government what changes to make and what taxes to implement.
It didn’t matter who was in Government. As Kenny kept saying to FF, they gave away our sovereignty. So that’s Kenny himself admitting that he had no power.
The Troika filled in the totals under the columns but the path taken to get there was up to them. Instead of smaller government by elimination of a 1000 Quangos and proper reform of the public service such as ending job sharing, rostering health consultants over 7 days, reducing prescription costs, tackling real waste in the PS, reducing massive salaries in ESB and subsequently lowering energy prices, reforming the legal profession, they made the “difficult choices”.
Carers, disabled, old and young. All targeted
ESB is private now so I don’t see what that has to do with anything. In fact, the ESB doesn’t exist at all anymore. Apparently opening the market up to competition was supposed to drive down prices. Secondly, if you think it’s wages that are pushing up electricity prices then you’re very much mistaken.
Secondly, as stated above the Legal Services Regulation Bill is currently making its way through the Oireachtas.
As for reducing the cost of drugs that is being done – see 2013 and 2014 budgets.
Again, I’ve no problem if you attack the government for legitimate reasons, e.g. systematic targeting of the youth for cuts and emigration as distinct from other sectors of society, or the cuts to the carers like you mentioned. There’s enough to criticise them for instead of making up ones.
nothing, but nothing changes for the majority in this country, ..an engineering company yesterday announced new jobs and also said they will have to go outside the country to hire the people with the relevant qualifications,,,,our country has been drained of its future,,,but sure what harm ,as long as its a “good political” move then thats all that matters…..because we dont!!!,,,an example being when announcing this in the Dail this morning Kenny said he was only doing so out of “courtesy”…a wonder he did not demand a thank you from each of us!!!
I’d say they’d do well to get people in from overseas aswell John. Who’d want to come and give over half their salaries to bondholders in fairness.
I don’t know if its just me or are Kenny, Noonan & Gilmore looking and sounding more like spivs every time they open their gobs,
The real reason is there is no German government formed at the moment so nobody is available to make the decision of €nda.
Enda Kenny doesn’t make decisions. He does what he’s told.
Its time the troika told him the reform the legal cartel and appoint an legal ombudsman
That’s pretty much the real reason. There’s no government in Germany to agree on any EU decision re a credit line and the SPD, who Merkel is seeking a coalition with, would never agree to it. If one had been available the government would’ve signed up to it, now they are trying to spin it as a brave decision.
Any news on who gets which nice little earner at the EU ? It must be almost time for Angela to dish out the goodies to all her boys.
“We’re hitting our targets”, says Enda
“Yes my Leader we are hitting the sick, the old, the young & the poor. Soon my leader you will see, they will be dropping like flies and that will fix the health, education & social protection budgets”, says Mick.
Its all about bums on seats. Need to get more g rowth of airline tickets one way to Canada or Australia!
The main reason is mein Enda wants it to look good on his EU C V, The Plank
Watch Ireland’s borrowing rate jump when the USA starts to taper its bond buying programme, and when Ireland doesn’t meet its wildly optimistic target of 2.2% growth next year.
Bonds will automatically increase when the USA turns off the tap of vast amounts of cheap money.
Last December, ‘High’ Noonan forecast Irish economic growth of 3% this year – we’re on target for 0.2%.
We need at least 2.2% growth just to sustain the national debt.
And when the bond lenders finally realise that our ‘friends’ in Europe will not let Ireland get retrospective relief on tens of billions of taxpayers’ money used to prop up failed Irish banks – which probably need more money.
Onward and downward.
A bondspike all across Europe would be welcome. It would finally force the ecb to tell the Germans to shove it and then act in the wider interest.
As is, the ECB/EU will happily let half the continent sink in to the mire for a generation.
Sure what do the Germans care about bonds going up a bit. Since this whole mess started almost 6 year ago Germany has SAVED €12 BILLION on reduced bond repayments.
In other Germany has saved €12 BILLION because the eurozone is in the $hitter.
And even if the rates go up sure Angela has another 5 years to get them down before having to seek re-election.
Most of Europe’s population are on the edge of bankuptcy thanks to the Euro and if Bonds go up in Italy and Spain then Italy may look at is books and say we actually run a primary surplus every year and can default and walk away from this mess and go back to the Lira and be in a good position.
Germany forgets about the Euro and only looks at its own needs. A natural thing to do but just another reason why the Euro is in such trouble. Every option is going to kill someone’s economy.
Is that another Fascist salute?
It was the salute or the finger. I was told the salute.
Dear peasants,
Here is the official news.
The unofficial news will scare you so we won’t be having any of that now
jesus that article was pure propaganda !!!!! goebells eat your heart out !!!
Well in fairness FG have a bit of facism in their past.
I think they should change the font to Russian Pravda style. Targets are being met. 5 year plans are on the way.
Gulags in longford?
Norman
a bit of facism in their past?
I think you underestimate them, sure all they did was stop wearing the pants after O’Duffy left.
hahahah brilliant !!!
Doesn’t make much a difference. Irish people would moan either way.
says the irishwoman moaning !!!!! hhhahahah
The terms that the EU wanted were so onerous and so blatantly an attempt at a last shakedown to benefit France/Germany that no one could go along with it.
Well done guys you now have secured your big pensions on the backs of the poor elderly and carers shame on you
Elderly have gotten off lightly in this recession. How about you look at youth unemployment figures or all the youth that have emigrated. That’s the real scandal. Fact of the matter is that the elderly have done alright. That’s why they’ll continue to vote FG and FF.
Nothing has changed for us and we are definetly not out of the woods yet when the mortgage arrears crisis blows up everything the irish suffered for will be for nothing.The government claims we regained our sovereignty but the truth is we signed it away like fools under the lisbon treaty and we will pay the price soon enough don’t forget the lisbon treaty is “self-amending” which means they can now change it without our consent.Still i’m happy we are out of the bailout,even if it doesn’t sound like it.
Lisbon? What has the Lisbon treaty to do with anything?!! The truth of the matter is that you don’t actually know what the Lisbon treaty said or does. AND it’s not self-amending. That’s why we had to have a referendum on the Fiscal-Compact Treaty last year! If it was self-amending there’d have been no need for a referendum.
It became self amending when we signed it into law that’s why they wanted it in so bad.
No it didn’t. Again, if it did then why did we have to have a referendum for the Fiscal Compact Treaty? Ireland cannot transfer any sovereignty over to an international body without a referendum- Crotty v An Taoiseach.
All the Lisbon treaty allows is that certain state areas where states have vetoes can be converted into majority voting areas BUT only when every state agrees to this, i.e. you can veto your loss of a veto.
You clearly have no idea what you’re talking about.
In what way are we “going it alone” when Mr. Kenny has stood in the Dail and told us of his chat with his good chum, Angela, and how she has had a word with a German Bank, who will see us right if things go a little pear shaped? Leave us alone, you are really annoying.
” his good chum, Angela, and how she has had a word with a German Bank, who will see us right if things go a little pear shaped?” Sheik how long do you spend thinking up silly comments, I really think some of you believe your own imagination, which would probably mean you are at best delusional and at worst completely insane
More positive news I see.
Must be a difficult time for the ‘no hope society’ who get off on doom and gloom.
Good to see the ‘yes we can’ society are starting to slowly turn this economy around. Well done to all who remain positive and motivated to make this country a better place for us all.
Until the ECB fixes the Euro crisis we’ll not grow our books are nearly balanced at this stage but no demand here or in the continent.
The only question is whether the EU/ECB will fix the wider Euro mess or not.
We can’t grow while the Euro zone is dying economically.
When we wake up on 16 December, Enda will still be Angela Merkel pet Labradoodle, Gilmore the champagne socialist will still support FG ministers over members of his own party and FF hopes of success at the European/Local elections will have disappeared because the “other” crowd has managed to fund Ireland until 2015 at least. Only in an election year is this possible. FG/LB can thank the ECB for lowering rates even further something that would not have being done if Europe as a whole was out of crisis. If interest rates did start to rise then we would be back to 2008 all over again. So much political bluster and so few figures would be how I would sum up today. The Dail bar must have been opened since 8:30 this morning judging from the jeers and heckling that occurred while this announcement was going on. Pissed politicians at 11:30 on a Thursday morning. Hooray for us.
Because they know not what they do.
Ireland still owe 200 billion+, Gillmore and Kenny think they have done a fine job, High unemployment, HSE in melt down, high emigration attacks on the aged, attacks on the youth, legal sector untouched, medical sector untouched, Bring on the local and European elections and see the back of Gillmore.
If the s##t hits the fan they can always increase our USC. Tossers
As from next year Irish, English and now German will be the official languages spoken on this island!!!!!!!
Great photos, particularly enda Adolf kenny, noonan getting a blowie and kenny grabbing merkles moobs.
Any chance the endaknob would exit the country.with the germs
I feel I owe an apology to him. The clever one has pulled it out of the bag and saved the country. I was wrong about him all along. Genius i tell you.
We did it because we have complete faith in our great leader
Reading through the majority of comments it’s plain to see nothing does change, The Naysayers will never see anything good regardless, I really try and limit the amount of negativity that I get in a day, but when I want a dose I know exactly where to come……….
Well why don’t you take a look at what’s they’re celebrating for one second. It’s the fact that the process of cutting to the bone is “finished”, something I don’t believe for a second; But even if this is true, the most important point here is it’s just the START of the repayments for the “bailout” (I suppose you could look at as the Irish bailing out German and French banks and paying for the privilege). There’s nothing to celebrate here.
Then they’re too dumb to actually take a precautionary line of credit because – “what would people think”; so if (when) the next major f**kup happens in a few years, like, when the ECB decides interest rates should go the other way, and a load of trackers start defaulting, then the second bailout is gonna cost a lot more.
@Tom Kenny, you’re dead right, this site is full of moaners and whingers and armchair politicians with no real clue!
History will be very kind to this fantastic man
Why are people saying were going it alone after we “finish” (but we don’t really) dealing with the troika??
We,re still paying back the IMF!
We,re still having taxes put on our basic needs to pay people behind closed doors and then we have how the tax payer is funding bank managers wages of over €1,000,000 a year, plus the governments RIDICOLOUS wages and their expenses and all the rest of what doesn’t come out of their own pocket.
This government and the previous ones have been nothing but a farce, looking out for themselves and bank balances and fuk d rest of us!
A spoon full of sugar will make the medicine go down, a parachutist with out an second chute springs to mind.
Now did ye read this boy racers?? No need to go around with your stupid German plates on your car. We are going it alone again. Be proud to have the irl on your plates
Bertie in his hay day was marched around Europe a hero you are falling into the trap and I Predict the same result
The negativity of these comments is depressing … It’s like people enjoy talking about misery during a historical day in our turbulent economic history
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