Friday 22 September 2017

Dijsselbloem warns jobless rate threatens our bailout exit

Jeroen Dijsselbloem: Dutch finance minister
Jeroen Dijsselbloem: Dutch finance minister
Colm Kelpie

Colm Kelpie

THE head of the Eurogroup has warned that Ireland will face risks when it leaves the bailout from the current high unemployment and the large number of mortgage arrears.

Ahead of a meeting with Finance Minister Michael Noonan today in The Hague, Dutch Finance Minister Jeroen Dijsselbloem said the country had built up enough cash to fund itself next year.

In a letter to the Dutch parliament, Mr Dijsselbloem said the bailout exit and the potential need for an overdraft facility will be discussed at a meeting of eurozone finance ministers in Brussels next week which he will chair.

"The market sentiment around Ireland is a lot better and Ireland has built up a cash buffer to finance itself in 2014," the letter states.

"Ireland was always fully committed to the (bailout) programme but there are still risks that can harm or influence the economic upturn."

Mr Dijsselbloem highlighted the high unemployment rate, at 13.2pc last month, and the level of mortgage arrears.

He also pointed out the trade dependency of Ireland to the rest of the eurozone, which eked out minimal growth earlier this year following six consecutive quarters of recession.

These three factors are indicated as risks for Ireland's "future economic growth".

FAILING

The Eurogroup will also discuss Greece's implementation of its bailout agreements, rules for direct bank recapitalisation from Europe's bailout pot the European Stability Mechanism and a proposed system for handling failing banks.

Ahead of each Eurogroup meeting, the Dutch parliament debates what the Netherland's position should be at the gathering of finance ministers.

"It's not really a Eurogroup debate but more of a Dutch domestic debate," a spokeswoman for Mr Dijsselbloem told the Irish Independent.

Ireland leaves the bailout programme on December 15 and Mr Noonan has held a series of international meetings with the IMF and European leaders to assess whether the country should apply for a so-called precautionary credit line to ease the transition from bailout to full market access.

Mr Noonan met Christine Lagarde in Washington last week, and ECB chief Mario Draghi and European Commission vice-president Olli Rehn the previous week.

Crucial to any decision will be the level of conditions attached to a credit line, which could be imposed even if the Government opts to apply for it but not draw down any money.

The Government has said the decision is "finely balanced", with the National Treasury Management Agency having already built up a €25bn cash buffer, which Mr Noonan described as a significant backstop in itself.

Irish Independent

Also in Business