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Thursday 18 January 2018

Clean exit from bailout will boost investment, says Hayes

Brian Hayes, TD, Minister of State for Public Service Reform and the Office of Public Works
Brian Hayes, TD, Minister of State for Public Service Reform and the Office of Public Works
Donal Donovan

John Drennan and Fionnan Sheahan

A CLEAN exit from the bailout will make the country more attractive to foreign investment, Junior Finance Minister Brian Hayes says.

The Government is not expected to take up any overdraft facility on exiting the bailout.

The Coalition is strongly veering away from taking up the option of the so-called backstop – but officials insist a final decision has not yet been taken.

A major element in the decision is the level of conditions attached, which would be imposed even if the country never drew down any money.

Former IMF deputy director Donal Donovan said yesterday the Government would not want to have to pass the overdraft deal through a number of EU parliaments.


"Our old friend, the corporation tax rate, might come up again," he said.

Finance Minister Michael Noonan has said the decision is a "free choice" for the Government and will be taken before the bailout exit next month.

Mr Noonan is continuing to hold a series of international meetings involving the International Monetary Fund and European leaders on the transition from the bailout to accessing the international money markets on a full-time basis.

"There's a lot of conversations going on. We are doing all the intelligence gathering," a senior government source said.

"It's a line of credit. It's not a gift."

Mr Hayes told the Irish Independent exiting the bailout would "bring a significant jobs and investment dividend".

However, he said there was surprise in the Department of Finance at how well the interest rates for 10-year money are holding up throughout the debate.

"We are outperforming the non-programme companies such as Italy and Spain. The international markets are quite buoyant," he said.

In an indication of the factors informing the Government's apparent desire for a clean exit, Mr Hayes said Ireland's departure from the troika programme would "release a significant cachet of foreign direct investment to the country".

"Ireland will be open for business in terms of increased foreign investment in banks and semi-states," he said.

Leaving the bailout will offer us "significant cachet" in terms of selling the country to foreign investors, he said.

Mr Hayes said banks did not invest in countries in bailout programmes and were prohibited because of internal risk assessments.

"I was speaking to 150 bankers recently in London and they said: 'We want to invest in Ireland but we can't while you are in a programme'," he said.

He said the investment funds that could be released include public-private partnership investment in schools and hospitals and semi-states like the ESB and Bord Gais.

In a reference to the Government's attempt to generate domestic employment, Mr Hayes said the exit from the bailout would "release investment for semi-states that have not been able to borrow".

"Banks don't differentiate between the Government, the ESB and Bord na Mona," he said.

"The three months following the bailout offered a unique window to sell the country internationally as the European success story and it's important this message would not be compromised by any impression Ireland is still in a bailout."

Irish Independent

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