Hi °C | Lo °C Officials, with the able assistance of Central Bank Governor and former economics professor Patrick Honohan, had to devise details which would not set obvious precedents for other countries and avoid the illegality of the European Central Bank lending directly to a government.
The liquidation of IBRC, the former Anglo, may have provided some legal cover for the ECB, and it certainly suited the Government's political purposes. One of these, as Mr Kenny, said, was consigning the remains of Anglo to history.
It is a real coup to have persuaded the ECB to change the terms on which it offered loans. (Don't be fooled by Mario Draghi's "Nothing to do with me, mate," act).
The savings are real. The official estimate is 0.6pc of output (GDP) – which equates to €1bn a year, although some estimates are slightly lower.
Faced with this, the opposition attacks centred on the immorality of taking on bank debt, the fact that there was no reduction in the debt, and the burden on future generations. The first is true but irrelevant now, the second was not politically possible, and the third has been exaggerated.
It is disingenuous of Sinn Fein's Pearse Doherty to say that every man, woman and child will pay back €14,000 in Anglo debt. That is not how it works.
Fianna Fail's Mattie McGrath had a different version, saying a child born today would get a present of a noose around his or her neck in 2038.
Tangible
In fact, at present no Irish government debt is due for repayment after 2025. If Irish governments start running surpluses as they are supposed to, the newborn will have nothing to worry about.
The Opposition will have more tangible bones to chew. There is a possibility that the IBRC loans will turn out to be worth even less than current estimates, requiring more government borrowing. There will be harder tackling at Croke Park and dashed hopes over the next couple of budgets.
What matters is not the total size of a budget – about €60bn – but the size of the changes. The €3.5bn correction this year caused intense strains on the Coalition and next year's planned €3bn was just as scary. Turning that into €1.5bn would be a huge relief, but it still leaves an awful lot of pain. It is hard to see that this will be greeted with cheering in the streets.
One thing which might still be negotiated with the troika is to ease up even more on the 2014 budget, and leave the following year's smaller correction largely intact. The real prize comes then, if Ireland can exit the bailout and return to commercial borrowing. Part of the problem with austerity is that there has seemed to be no result.
This is the real prize from the deal, although many still believe that Ireland's total debt is unsustainable. If it is, that will become clear and will have to be dealt with. It is not today's problem.
For the Government the immediate problem is to do a better job of selling a strategic, medium-term view instead of making often exorbitant claims for individual achievements.
For the first time it may get a helping wind behind its sails.
The deal should be good for confidence, and not just in Ireland. A recovery in the eurozone, as the markets seem to expect, could add to that and finally begin to replace the pall of gloom with something brighter.
Irish Independent
