Editorial: We should not be punished for making painful progress
Published 22/07/2014 | 02:30
It will come as a shock to most people that the Government is now paying multiple times the interest rate on bailout loans than it would cost us to borrow on the markets today. A report in our Business pages sets out the figures. Replacing €22.5bn of expensive IMF loans with normal market borrowings could potentially save as much as €930m this year for the Exchequer, although the saving would be less as the total debt is whittled down.
The interest charged by the IMF increased earlier this year to 4.99pc, while the price of borrowing on the markets has fallen to barely more than 1pc annually for the Government to borrow for seven years.
Those kind of numbers could have huge implications for the Budget in October – the potential difference between another vitality-sapping round of austerity and at least some prospect of a desperately needed economic boost.
In theory, we could go to the bond market and raise cheap cash to repay the expensive IMF deal early.
But the terms of the original bailout don't allow it.
Any move to repay a share of the IMF loans early would automatically trigger repayment of an equal share of European bailout loans.
A previous re-negotiation of the EU loans means they are far more manageable than the IMF debt, so it doesn't make sense to pay that off quickly.
The answer is to ask European leaders to waive their right to be repaid at the same time as the IMF; which only means letting Ireland stick to the agreed schedule.
In one sense, the anomaly is testament to the success of our exit from the bailout. The IMF, along with the European rescue funds, were lenders of last resort, there when the markets were closed. Frankly, in the chaotic winter of 2010, Ireland was in no position to argue over the fine details of the interest bill.
Four years later, with another Budget looming and still no sign of Europe budging over a deal on our bank debt, it is time to urgently re-evaluate rescue terms that have ended up punishing Ireland for the progress made in re-engaging with international lenders.
Choice of Gaeltacht Minister is inspired
The decision by Taoiseach Enda Kenny to appoint a non-native Irish speaker – Joe McHugh – to the post of Minister for the Gaeltacht may, despite the criticism from language purists, turn out to have been inspired. This country does not need a minister of state for the Gaeltacht, which has shrunk dramatically and has, in any case, been replaced by the urban Gaelscoil movement as the bastion of the living language.
But we could do with a minister of state whose brief it is to make the Irish language accessible to the majority of people.
Mr McHugh, speaking yesterday at an Irish course he is attending in Donegal, said: "I haven't used the language for 20 years since I learned it all from books."
In doing so, he was articulating the experience of the vast majority, who have a sneaking regard for the Irish language but see no reason to use it in their daily lives, either for business or pleasure.
Mr McHugh must not become a hostage to the Irish language lobby, or pander to its cult-like status.
Instead, he should focus on how he can bring his own experience to bear on those who have "an cupla focail" and would like to extend their knowledge to conducting basic conversations with friends and family in the so-called first official language.
The school system has clearly failed to instil the language into successive generations of pupils so maybe Mr McHugh can foster a new era where the language will be valued as something we want to preserve as a cultural asset rather than a dead language we have been forced to learn badly and, in most cases, against our will.