We must stump up €17.5bn for fund
Published 29/11/2010 | 05:00
THE main condition attached to Ireland's €85bn rescue package is that the State must put €17.5bn of its own money into the fund.
It will get this money from the National Pension Reserve Fund (NPRF) and from its cash resources.
The NPRF currently is worth €24.5bn and the managers of this fund will now have to sell off the property, share and private equity investments held in the fund.
The requirement for Ireland to put its own money in is just one of a series of stringent conditions insisted upon by the EU and IMF. The whole programme had to be agreed with these bodies, plus the ECB, and a strict timetable will also have to be met. The money will be paid in quarterly instalments, but only after quarterly targets have been met.
The Government and the three bodies will now draw up a contract, known as a memorandum of understanding, and in this a whole range of targets and milestones will be included.
Ireland will also have to produce quarterly reports showing how it progresses.
The programme includes changes to taxation policy; more competition for so-called "sheltered sectors" of the economy; and even changes to how large some shopping centres can be.
Many of the requirements are already in the Government's four-year plan. Fox example, tax bands and credits will be changed and a site valuation tax introduced.
The IMF and EU also want to see the state pension qualification age increased to 66 years from 2014 and to 67 by 2021.
Reforms of the public sector under the Croke Park Agreement are also being demanded and public sector pensions will be reduced on a "progressive basis" by 4pc.
A so-called "fiscal responsibility law'' will be introduced imposing a cap on the levels of expenditure in certain areas. Any windfall revenues the Government gets, most likely from selling the semi-states, must be used to pay down the debt.
The labour market is one of the areas where the most conditions are. Apart from the minimum wage being cut by €1 an hour, government departments and state agencies will have wider scope to claim "inability to pay'' when presented with workers' pay claims.