EU-IMF lukewarm about plan for 100,000 new jobs
Published 07/11/2011 | 05:00
The Government will have to overcome three separate hurdles to convince the bailout team to back its investment plan to create up to 100,000 new jobs.
The New Era plan to invest billions from privatisation in water, broadband and energy infrastructure got a lukewarm response from the EU-IMF bailout monitors.
But the plan wasn't shot down entirely by the Troika and negotiations will continue.
The job stimulus plan was a central plank of Fine Gael's general election platform. The Coalition wants to invest funds from the privatisation of semi-state companies, including part of the ESB, rather than simply using the revenue raised to reduce the national debt.
But the Irish Independent has learned the Troika had the following concerns:
•The infrastructure projects are not part of the normal capital investment plan.
•Funds from privatisations normally go directly into debt reduction.
•The danger of setting a precedent which other bailout countries would follow.
During the latest review of the bailout last month, the Government presented a business plan for the running of New Era, the body that will handle the sale of state assets.
The Government explained it wanted to use the proceeds of the sale of state assets for growth and job creation rather than to pay down debt.
The Coalition anticipated there would be opposition to the money from privatisations not going directly into debt reduction.
Government sources said the Troika was less hostile to the plan as it was provided with more detail.
"No decision was made. It does require their consent. They were less bloody-minded about it at the end of the process. They were in listening mode. One of the problems was if they didn't allow it to happen in Greece, but did here, then it might create a precedent," a source said.
The Government is hoping to draw together funds from privatisations, the National Pension Reserve Fund and private sector investment.
"The Government has made a decision on ESB and it wasn't going to agree to the sale of state assets if it's not for a jobs stimulus," a source said.
In the opening round of negotiations, the Troika also took the view the Government has a capital budget and didn't see why the water, broadband and energy investments did not fall into the same category.
The bailout team is also understood to have been irked by the idea that all resources should not simply be directed towards reducing the deficit.
The Troika feels the top priority is simply to reduce the deficit, get back to the markets and end the need for the bailout.
The Government already has a battle with the Troika over the amount that has to be raised from privatisations.
The target set by the IMF is €5bn, while the Government's own figure is just €2bn.