Sunday 19 November 2017

Debt Crisis: Michael Noonan to raise bank debt deal with Germany’s Wolfgang Schaeuble

Michael Noonan
Michael Noonan
Fionnan Sheahan

Fionnan Sheahan

FINANCE Minister Michael Noonan said the Government will be working on Ireland's bank debt deal when he meets German finance minister Wolfgang Schaeuble next Monday.

"We will be trying to build on the commitments out of Berlin and Paris," he said.

Mr Noonan, who was speaking after the eighth review of the EU/IMF/ECB troika, also drew attention to comments by the Finnish Prime Minister Jyrki Katainen who said backdated recapitalisations could happen on a case-by-case basis.

He said this was a significant shift from the statement by the Helsinki Three - the finance ministers of Finland, Germany and the Netherlands - said last month that the new EU bailout fund, the European Stability Mechanisn, could not be used for retrospective recapitalisation of banks – we have pumped €64bn into the banks.

Mr Noonan also said the Government has begun talking to the EU/IMF/ECB troika about exiting the €67.5bn loan bailout programme.

Mr Noonan, speaking after the successful eight review by the troika, said the bailout is due to end at the end of 2013 and the Government has started preparations for the exit.

"We are thinking now about the process for existing the programme," he said.

The Government re-entered the bond markets this year for the first time since the bailout.

"We are at the stage now where we are just taking the first steps for leaving the programme," he added.

Meanwhile, Mr Noonan also said the Government will be downgrading it's growth forecast for next year.

"It looks at present there will be a marginal marking down of the growth forecast - not for 2012 but for 2013," he said.

Mr Noonan said the mark down will not affect the budget arithmetic.

"It's not that significant," he said.

Meanwhile, Minister for Reform Brendan Howlin said the overspend in health won't be as high as €500m by the end of the year.

Mr Howlin said the Government won't know until the end of the year what the overspend it but it won't be the predicted figure of €500m.

He said work "might and main" to address the current overspend.

"I don't expect it to be that high but we will be working hard to address those issues,"

Mr Howlin said the EU-IMF was not worried about the overspend.

"The Troika is interested in the ceiling of expenditure," he said.

In a statement, the troika review team from said that creating jobs should be top of the agenda.

"Unemployment remains unacceptably high, especially among the youth, making job creation and growth a key priority," they said.

"Engagement with the long-term unemployed should be a priority, including through timely and well designed involvement of the private sector in providing employment services."

The troika expects economic growth of 0.5pc this year and 1pc next year.

On the health budget, the review team said: "The authorities are alert to the health sector overruns and are determined to meet the programme target for a budget deficit below 7.5pc of GDP in 2013."

The troika raised concerns about the level of personal and household debt.

"Intensified efforts are required to deal decisively with mortgage arrears and further reduce bank operating costs," it said.

"Parliament is currently considering an ambitious reform of the personal insolvency framework. For this essential reform to succeed, a careful balance should be struck that addresses borrowers' financial distress and protects the family home, while also reinforcing debt service discipline."

The review ran from October 16 to 25 and involved a series of meetings with Government ministers, opposition politicians, unions and other interested parties.

On budget plans, the troika suggested: "The measures adopted in Budget 2013 should be durable, as growth-friendly as possible, and minimise the burden of adjustment on the most vulnerable."

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