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Brendan Howlin and Michael Noonan at the financial review briefing this morning
LIVE BLOG

Ireland has met its first quarter obligations with EU/IMF

Finance Minister uses financial briefing to announce jobs initiative for May and confirm minimum wage to be restored to €8.65 – but employers’ PRSI to be cut in part.

Updated 13.45

FINANCE MINISTER MICHAEL Noonan has said that Ireland “is meeting its obligations and conditions” under the terms of the EU/IMF bailout loan. He told a press conference this morning:

We’re fully in line with the programme at the end of the first quarter.

A delegation from the IMF has been in Dublin for two weeks assessing the country’s progress under the terms laid out in the bailout package. Noonan said this morning that the Fine Gael/Labour government disagreed with some of those conditions and wanted them replaced with some of the suggestions Fine Gael made in their programme for government. He said:

That went very well. They were very complimentary to us on being very decisive.

He also said that the EU and IMF fully backed the Government’s recent announcement that it would restructure the banks. Recapitalisation of ailing financial institutions is to be completed by 31 July, with the exception of Irish Life and Permanent which needs time to sell Irish Life. He added that the EU and IMF didn’t expect “further shortfalls”.

This morning, Noonan also confirmed that the change in the minimum wage will be restored to €8.65. However, employer PRSI will be reduced by 50 per cent “on the tranche of income” up to the weekly minimum wage of €356.

A second announcement involved a “jobs initiative programme” which is to be introduced in May. While both Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin said the word “initiative” was important as it implied that the scheme will be “fiscally neutral”, they refused to elaborate when pressed by journalists for more details on how it would be funded.

The third element covered by this morning’s briefing was to say that the review of Government spending had been successful.

Brendan Howlin said:

It has been an eventful five weeks in government The EU and IMF have signed off on what we have done to date.

He said that the spending review would “shape the spending envelope for next year” and that the Croke Park Agreement was extremely important.

Michael Noonan, however, said that while the government doesn’t “want to make pay cuts, we have to make savings in the public payroll”.

Asked whether he considered that Nama was fit for purpose, he said that it was “very established” and that “it has a business plan that it is working towards”.

The troika of the EC, the ECB and the IMF confirmed that their quarterly review of the Government’s economic programme had been concluded. The troika released a statement saying:

The teams’ assessment is that the program is on track but challenges remain and steadfast policy implementation will be key. Ireland is making good progress in overcoming the worst economic crisis in its recent history.

The troika said that the “macroeconomic outlook for 2011 is for growth to resume”. It also said that the restructuring and recapitalisation of the banking system is “a major step towards restoring the Irish banking system to health”. It noted that the positive reaction of the markets to the move had proved that this was the correct way to proceed.

The fiscal targets for end of year 2010 and end of March 2011 “were met by a comfortable margin”, the report mentioned. The jobs initiative also got a mention, which the troika said was aiming to stimulate employment but “within the agreed fiscal targets”.

The next review of Ireland’s economic progress is scheduled for July.

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