Wednesday 21 March 2018

Cold turkey may be on menu for festive bailout exit

TO go it alone or not? It's not an easy question facing Finance Minister Michael Noonan, but the clock is ticking down.

Publicly, the Government is hedging its bets on the issue of whether to apply for a so-called precautionary credit line, with the oft-repeated statement that it's finely balanced and that we could go either way.

But there are a growing number of voices exhorting the Coalition to sign up for what some see as a mini-bailout dressed up as an overdraft facility that will, hopefully, never have to be drawn upon.

Mr Noonan would be hard-pressed to find a dissenting voice among so-called experts.

Even Fianna Fail declared it would be a prudent move.

All the signs point towards the possibility that the Government will go cold turkey from bailout to accessing the international money markets on a full-time basis.

In a form of megaphone diplomacy, Mr Noonan said in his Budget speech that the €25bn cash buffer built up by the NTMA was a significant backstop in itself, clearly asserting the Government's independence in financial decisions as it prepares to leave the three-year bailout programme and laying down a clear negotiating marker.

The list of conditions attached to any credit line is a crux issue and the Govern-ment is making clear it now has enough wriggle room to make its own decisions.

European Economics Commissioner Olli Rehn has suggested this could be possible.

Brokers Goodbody, Cantor Fitzgerald and Bloomberg yesterday set out their stall and urged the Government to sign up for the overdraft facility, with Bloomberg warning the recovery is weak and setbacks possible.

But in the lead up to the Budget, a raft of experts extolled the virtues of sticking with the €3.1bn adjustment. Mr Noonan shrugged off that advice and opted to do it his own way. There's no reason to think he won't do that again.

It's difficult to call either way.

Irish Independent

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