Friday 22 September 2017

Ireland to go it alone: Kenny announces clean exit from bailout

Taoiseach Enda Kenny has announced the country will make a clean exit from the bailout
Taoiseach Enda Kenny has announced the country will make a clean exit from the bailout

Taoiseach Enda Kenny has announced the country will make a clean exit from the bailout, without an overdraft facility.

The decision was taken at a special Cabinet meeting this morning, where not taking up a credit line was recommended by Finance Minister Michael Noonan.

Tanaiste Eamon Gilmore said the decision was "historic, important and welcome" but there will be no celebrations

Mr Kenny said he was informing the Dail of the decision as a courtesy.

"The Government has decided that Ireland will exit the EU-IMF assistance programme on December 15, without the need to pre-arrange a new precautionary credit line from our EU and IMF partners.

"This is the right decision for Ireland, and now is the right time to take this decision," he said.

But Mr Kenny said neither today’s decision, nor the exit from the bail-out in December, means the end of difficult economic decisions.

"There are still demanding times ahead. It does not mean any windfall of cash. It won’t mean that our economic and financial challenges are over," he said.

Mr Kenny said the Government will also publish a new Medium Term Economic Strategy to include a recommitment to bringing borrowing down to sustainable levels during the remainder of the coalition's term of office.

"It will be an economic plan based on enterprise, not speculation. Never again will our country's fortunes be sacrificed to speculation, greed and short-term gain," he said.

"And despite the economic challenges that people will continue to face in their daily lives, we will set out a path to a brighter economic future for our people, a path from mass unemployment to full employment; from involuntary emigration to the return of so many thousands of our people who have had to leave to find work.

"Nobody should doubt our commitment to finish the job we started when we took office.  Today is just the latest step on that ongoing journey: a significant step, for sure, but also, just another step towards our ultimate objective of getting Ireland working again," he added.

Meanwhile, German Chancellor Angela Merkel backed the Government’s decision to exit the bailout without an overdraft.

The Chancellor welcomed the announcement by Taoiseach Enda Kenny saying “Ireland is ready for this step”.

“This is an important day for Ireland, and an important moment for the Eurozone. It is now time for Ireland to return to the markets in a sustainable way, strong enough to do so without the need for further credit support.

“Germany is confident that the Irish Government is acting in the best interests of the Irish people and the Irish economy. Ireland is ready for this step,” she said.

She added that Ireland and Germany have agreed to cooperate on a plan to improve funding mechanisms for the real economy, including access to finance for small businesses in Ireland.

“The KFW, the German development bank will work with the Irish authorities swiftly, in order to deliver onthis initiative at the earliest possible date,” she said.

Bond markets were also welcoming of the decision.

Boorrowing costs for Ireland fell marginally on international money markets after the announcement.

The yield or interest rate demanded to lend to the state for 10 years slipped to 3.53pc from 3.56pc - this compared with 1.71 for Germany.

International Monetary Fund managing director Christine Lagarde said despite uncertainties in Europe and globally, Ireland has established a good reputation for policy implementation.

“This bodes well as Ireland exits its EU/IMF-supported program,” she said.

“Although uncertainties remain in Europe and the global economy more broadly, Ireland is in a strong position in terms of its bond yields and has built a sizable cash buffer.

“We look forward to continuing to work with the authorities as they address the challenges that remain.”

Olli Rehn, the European Commissioner for Economic and Monetary Affairs, agreed that challenges remain but he added that Ireland has made progress and is well-placed to make a successful and durable exit from the three-year bailout programme.

“Graduation from the programme will send a very clear signal to markets and international lenders that the adjustment effort undertaken in Ireland, with the support of its European and international partners, has paid off,” he said.

“Ireland has accumulated significant cash buffers under the programme, helped by the decision taken earlier this year by European creditors to extend the maturities on loans granted to Ireland.”

By Fionnan Sheahan, Group Political Editor

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