#Open journalism No news is bad news

Your contributions will help us continue to deliver the stories that are important to you

Support The Journal
Dublin: 2°C Saturday 27 November 2021
Advertisement

Liveblog

4,335 Views 4 Comments
Share

WE LIVEBLOGGED EVENTS from EU headquarters on Dawson Street, where representatives from the European Commission, European Central Bank and International Monetary Fund discussed their latest inspection of Ireland’s progress.

Right, press conference two. The European Commission’s representative says the programme is “stable with a sound design” and that Ireland is meeting its difficult targets, despite the global picture.

European Commission: The target for 2012 will be to cut the deficit by another 2.75 per cent of GDP, down to 8.6 per cent. This is on track, despite the lower-than-expected growth which is now forecast. There’s also praise for the legislation submitted to reform the legal wage system, and the JLC system.

Straight into questions, three at a time…

1. Robert Shortt from RTÉ asks about the Troika’s new funding arrangements for the promissory notes. Can anyone discuss that? And does the ECB accept that the cost to Ireland of repaying those notes is too high?

2. Marc Coleman, Newstalk: Do you have any comment on the comments of Mario Monti, requesting ‘flexibility’ from Germany and the ECB to acknowledge the performance of bailed-out country? And is it preferable for the government to fix the public sector before raising taxes?

3. Brian O’Donovan, TV3: Are there targets you feel could have been better achieved?

On Q1, Craig Beaumont from the IMF: Ireland has requested technical discussions, and we’re working towards a “joint technical note”. At this stage we have little more to add.

On Q2, the ECB doesn’t want to comment on political comments such as Monti’s, but the ECB has been “very flexible” – pointing to the recent batch of three-year loans for banks, which was heavily taken up all across the eurozone. (Returning to Q1, the ECB says it’s not for them to decide – it has its rules, and it’s working together with the commission to find technical solutions.) The European Commission fudges the question, saying both public sector and tax reforms are “difficult and important issues”.

On Q3, the European Commission says the sale of state assets is a long process and we’re only at the beginning, but that it’s only fair that assets be sold to get a good price.

More questions… Q4. Stephen O’Brien, Sunday Times, raises job creation measures. Can you expand and elaborate on where Ireland can improve there?

Q5. Philip Boucher-Hayes, RTÉ, as a supplementary question on state assets – asking how much the Troika has “moved” with regard to how much money can be used for economic stimulus.

Q6. Justin McCarthy, Today FM: What’s your view of the attitude of Irish people towards the bailout programme over the last year?

Q4. EC: It’s important that the unemployed are “constantly engaged” in the hunt for jobs. For the first time in over a decade, educational achievement of the unemployed is declining, so we need to improve there.

Q5. EC: We’d like to understand the plans for asset sales… when we see the plans, we’ll “encourage authorities to be ambitious”.

Q6. EC: We receive emails – the Irish are very skilful in finding my email address – and recently they’ve been very encouraging, realising that structural reforms are there to make their lives cheaper and easier. I’m not denying the social consequences of the programme, but there are encouraging changes. ECB: We’re impressed by the depth of the discussion, and understanding of the complex issues. Taxi drivers are often very well informed, jokes Klaus Masuch. IMF: Most people accept the need for the bailout, even though its difficult for some. I’ve interacted with a number of countries but I’m impressed with the determination.

Q7. Vincent Browne, TV3: Did the taxi driver say that we were bewildered about having to pay unguaranteed bondholders for debts we didn’t take on? Simply to bail out European banks? If you had been asked that, what would you have said?

(There is now a procedural row about whether Vincent can ask a follow-up.)

Masuch from the ECB says he had answered a similar question from Browne two years ago, and says he understands that it’s a difficult decision, “no doubt about it”. But there are different aspects of the problem which must be balanced against each other, and in order to ensure confidence in the banking sector, those bonds must be repaid.

7a. Browne, again, says Ireland has to repay “billions on unguaranteed bonds” for a “defunct bank” simply to help the banks of other countries. Explain that to a taxi driver. The ECB’s Masuch says he’s answered that, but Browne disagrees.

“Why are the Irish people required to pay billions to unguaranteed bondholders, under threat from the ECB?… You people are intervening in this society and causing huge damage… Now could you explain why the Irish people are inflicted with this burden?” Masuch says he has “given an answer”.

Q8. (Unnamed questioner) How come you’re so confident about meeting our targets, with growth forecasts having come down?

Q9. Sean Whelan, RTÉ: The IMF’s last report suggested that if growth projections don’t pan out this year, the IMF was advising the government against a mini-Budget to correct the outcome. Is that IMF-only, or shared by the Troika? Also, what do you think of the Croke Park agreement?

Q10. Ingrid Miley, RTÉ, also wants the Croke Park question but also “what exactly you’re looking for” in terms of reforms to the new JLC system.

On Q8, the EC’s Istvan Szekely reminds us that many people didn’t think Ireland would reach the 2011 targets. Ireland is a strong system which can deliver its targets. All three institutions have the same target, and the Budget has significant buffers to get through. The IMF says it believes its projections are sound, given how the 2011 ones were beaten. Ireland does need to narrow a large deficit, over time, so it’s appropriate that the 2012 adjustment is a hefty one (2.75 per cent of GDP), particularly because it’s part of a more medium-term plan.

On Q9 and Croke Park: EC: It’s up to the government to decide where its savings should come from… we see the wage bill as an important source of savings, but it’s up to the government and parliament to decide how much it wants to cut from there. So far the targets have been met.

On Q10 and sectoral wages: The EC wants to make wage-setting more flexible, so that struggling sectors like constructions can find the right wage balance to get people back working.

Q11. David Murphy, RTÉ, asking about IL&P: Does it need further money? And do you have any deadline about announcing a plan for it?

Q12. Jamie Smyth, FT: Why is it important for Ireland to sign up to the new EU treaty, and what consequences if Ireland doesn’t sign up?

Q13. ODS News: Is the EU’s policy of socialising losses and privatising profits a new form of fascism?

Q11. The IMF: There’s work on a new plan for IL&P underway, and the whole process will conclude by the end of Q2. That’ll have a range of options. Until an analysis is done, we don’t have a basis to expect any need for extra funding.

Q12: EC: The ‘fiscal responsibility’ bill, which overlaps with the treaty, is an important part of the jigsaw, but it makes sense to wait for the treaty. “Signing up is a decision for Ireland” but the EC thinks it would be good for Ireland to adopt it.

Q13 was not answered, oddly enough.

Q14. Simon Carswell, the Irish Times: Are there other ways of downsizing the ownership and size of banks instead of having to sell them off in fire sales?

Q15. Robert Cox, the Star: Given the downturn in growth in Q3, and the views of Joseph Stiglitz who thinks austerity is ‘medieval medicine’, and the view of the IMF’s chief in Iceland who believes their recovery is remarkable… how do the people of Ireland, who face savage cuts and emigration, know that you know what you’re talking about?

Q16. Paul Hannon, Dow Jones: How would Ireland’s access to funding from this programme (or a second one, if necessary) be affected if Ireland voted No in a referendum?

Q14. The ECB: Any previous plans to downsize banks have been overperformed, so in that sense there’s no panic. Of course we monitor market developments, but we’ve no plan to change the downsizing targets. Downsizing is not only selling assets, but also making banks more efficient. In any case, we will carefully look at developments in that area.

Q15. The EC on ‘will things be better’? “This isn’t the first programme in Europe”, they say. Look at the Baltic states we’ve helped before… they’re growing at 6 or 7 per cent every year now. If Ireland does what it needs, and replicates those similar open economies, it’ll be fine. Of course, every country is different, but there is evidence that this is possible – so far, Ireland’s performance, particularly in exports, is “really impressive”.

“We’re doing out best to achieve the goals in this programme, and we have the basis to assume that those changes will bring about results. That’s how far we can do, and we’re doing our best.”

Q16. The EC won’t comment on that, simply because the deal behind a referendum has not yet been agreed.

Here, by the way, is the Troika’s latest press release about the Irish mission.

Q17. Shane Coleman from Newstalk, on the IMF’s view that the 8.6% target shouldn’t be set in stone. Does the EC share that view?

Q18. Philip Boucher-Hayes: Same question, please, but separate answers from the ECB and IMF, on unsecured debt. Are we required, under that memorandum, to repay that? And what would be your position if Ireland tried to restructure that?

Q17. The EC says the 8.6% isn’t “cast in stone” – it’s only “on paper” – but again, it thinks the 8.6 per cent target is a “conservative” one and Ireland is likely to reach it. Of course, however, nobody wants to damage the economy or cut so much as to put it at risk.

The ECB: Over the last 13 or 14 months, Irish authorities have implemented the programme “very very well” and this is borne by the yields on Irish bonds, due to the success of the Irish programme so far.

Q18 (the bondholders): The IMF says there is no change in its position. Burning junior bondholders has saved Ireland around €15bn. Liability operations in relation to senior unsecured debt is also an option – this is an IMF policy since 2001. For us, that’s an option. The ECB: The bondholding issue isn’t in the memorandum.

One more question, from UTV Radio’s Eileen Brophy – are there any concerns about Ireland’s targets for 2012?

The ECB: There’s no worry. The government has the ability to meet the targets and shown they can do it.

The EC: We’ve listened to all parties – NGOs, social partners, and so on. We want to work together with everyone to find solutions to difficult problems. There are issues where we should make more effort, but we’ll do what we can to bring everyone on board.

And that’s the lot – not a major amount to report there; the general vibe from all three parties was that it’s full steam ahead for the Irish programme. Although there are certain risks, Ireland has overperformed thus far, and there’s no reason to expect that it can’t meet the targets laid for it.

There’s also division between the IMF and ECB about the possibility of burning unsecured bondholders, and the Troika has played down the progress regarding how Ireland may invest proceeds from the sale of state assets.

Fully story to come – thanks for reading.

About the author:

Gavan Reilly

COMMENTS (4)