Business Irish

Thursday 2 October 2014

Surveillance from Brussels will continue after bailout until 75pc of EU's loans have been repaid

Published 23/11/2013 | 01:00

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Michael Noonan, pictured recently at an EU Finance Ministers' meeting, says a date currently can't be pinned down

THE Government can't give a definitive date as to when the twice yearly post-bailout surveillance will end because it doesn't know when some of the European loans will fall due, under new repayment arrangements.

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The State will be subjected to "intensive surveillance" until at least 75pc of the bailout loans are repaid under new EU budgetary rules for countries leaving official support programmes.

But Finance Minister Michael Noonan has said that the extension of the maturities on some of the European loans, agreed earlier this year, meant it was not possible to pin down a date.

CRISIS

EU loans come from the now disbanded European Financial Stability Facility (EFSF), a temporary European bailout pot set up in the wake of the crisis, its successor, the European Financial Stability Mechanism (EFSM), and bilateral loans from the UK, Sweden and Denmark.

The maturities for the EFSF and EFSM loans, were extended by an average of seven years following agreement in Dublin in April.

But in response to a parliamentary question, Mr Noonan has revealed that the finer details of when the monies are to be repaid have yet to be pinned down.

"In the case of the EFSF, the details of the maturity extension have been agreed," the minister said.

"However, for the EFSM loans which are funded differently, the details of the maturity extension will not be known until the existing loans mature.

"It is therefore not possible to give a definitive estimate of the date on which Post-Programme Surveillance will cease."

As of the end of October, the Government owed €16.14bn in loans drawn down from the EFSF, and €21.7bn from the EFSM under the €67.5bn international bailout.

EU finance ministers agreed at a meeting in Dublin in April to grant both Ireland and Portugal more time to pay their bailout loans in a bid to pave the way to a quicker return to growth.

Following the announcement last week that Ireland would not be seeking a precautionary credit line as it exits the EU/IMF lending programme, Dutch Finance Minister and Eurogroup chair Jeroen Dijsselbloem said Ireland would still be subject to "intense surveillance".

But he said there would be no extra measures imposed above and beyond those laid down as part of the bailout programme.

European Economics Commissioner Olli Rehn, said the surveillance would include regular reviews, twice a year in conjunction with the IMF.

Mr Noonan later said the surveillance would not be akin to visits from the troika during the bailout.

And he said all countries across Europe were being subjected to extra scrutiny from Brussels anyway, under new rules established as a response to the crisis known as the Six Pack and Two Pack.

Meanwhile, ahead of a meeting of European Finance Ministers in Brussels to discuss the draft budgets of member states, Mr Noonan said he welcomed the latest report from the state's budgetary watchdog, the Fiscal Advisory Council.

RISK

It warned that easing up on Budget 2014 had heightened the risk that the Government would not meet a crucial EU target to cut the budget deficit to below 3pc of the value of the economy by 2015.

"Overall, their report shows that the Fiscal Council approves of the general thrust of government policy and they challenge us as they should on a number of issues," Mr Noonan said.

"If the Fiscal Council and the Government were fully in agreement on everything, the Fiscal Council would be pretty pointless and would lose credibility."

Irish Independent

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