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Sunday 17 December 2017

Varadkar may just be right on second bailout – Independent TD

Rosemary O’Grady, Brian McDonald, Barry Duggan and Fionnan Sheehan

Silenced Transport Minister Leo Varadkar, who suggested that Ireland may need a second bailout, could actually be right, Independent Dail deputy Stephen Donnelly said today.

Praising the minister for "some straight talking" on Ireland's debt, he said he was right to question Ireland’s ability to return to the bond markets next year as our sovereign debt is regarded as junk.

“The reality which the markets have known for some time is that they won’t lend us money for paying back everybody else’s debt. This is the mistake that was also made by Fianna Fail,” he said.

The Wicklow backbencher, who worked for international management consultancy McKinsey & Company on transformational change before entering the Dail earlier this year, said on RTE’s Morning Ireland that it was refreshing that a minister would call it as it is.

Mr Donnelly said Mr Varadkar would probably be more accurate than the Taoiseach or Minister for Finance Michael Noonan who rubbished his cabinet colleague’s claim by insisting that there would be no requirements for a second round of aid.

Mr Donnelly stressed that international agencies were now saying that the projected growth of 1.6% in the Irish economy would not now happen and in the circumstance of no growth, it would make it extremely difficult to negotiate loans.

The controversy arose following a statement by Mr Varadkar claiming it was very unlikely that Ireland would be able to go back to borrowing on the bond markets next year. “I think it might take a bit longer.......2013 might be possible but who knows,” he said.

Mr Donnelly said that in his view Mr Varadkar’s 'refreshing assessment' would prove to be more accurate than that of the Government.

Taoiseach Enda Kenny and Finance Minister Michael Noonan yesterday finally led a concerted rearguard action to get the Government back on message and quell fears it was not meeting its economic targets, maintaining there would be no new bailout.

But Central Bank governor Prof Patrick Honohan said it wasn't possible to say when the Government would return to borrowing on the international markets.

Prof Honohan said the "necessary medium-term actions" were being taken "to get that confidence back".

"I'm not going to put a date on it," he said.

In an apparent swipe at the minister, the governor said it was hard to get the balance right between communicating what's on your mind and having that taken up in a mistaken way.


"On a weekly basis I see statements from officials in different countries about different things which I say, 'Well, mmm. . . maybe he probably regrets saying that'.

"I think it is very difficult to combine openness and willingness to communicate with the general public with making statements that can be interpreted by markets in ways that are destabilising.

"This is the world we live in. From time to time, statements will be made that will be picked up by the markets," he said.

Mr Varadkar was unavailable for comment following his bailout blunder.

Addressing accusations of mixed messages from his Cabinet, Mr Kenny said he wanted to give "absolute clarity".

"There will be no need for a second bailout for Ireland in 2012. We've made that absolutely clear.

"We are in a bailout, we are meeting the conditions of that bailout and will continue to do so," he said.

Mr Kenny said the first review of the bailout showed Ireland had "measured up" and the Government was meeting the conditions.

"The bailout programme runs until the end of 2013 and Ireland has sufficient money in all circumstances to deal with that.

"So, we will be advised by the National Treasury Management Agency in respect of the country's capacity to go back into the bond market to any extent by the end of 2012. . .

"It was never the intention that Ireland would go back into the bond markets on a full scale basis by the end of 2012 as we are in a programme that runs til the end of 2013," he said.

Mr Noonan also said there would be "absolutely no second bailout next year in Ireland".

The Finance Minister said Mr Varadkar should not be reprimanded for his remarks and described the comments as "reasonable" when put into context of how the transport department could be financed.

"I think what he said was reasonable in that in his department, if you are looking for public-private partnerships to put in transport infrastructure, that it will be hard to get private sector money when Ireland is not in the markets. I think that is a reasonable position," he said.

Mr Noonan said the Government's position on the bailout package was that the country would attempt to get back into the markets by the end of 2012.

Commenting on this sensitive issue on Newstalk this morning, Joan Burton, Social Protection Minister declared; "This is a marathon not a sprint... we are meeting the terms and conditions we signed up to." She added that this was a 'work in progress'.

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