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NTMA: No access to ESM would mean no access to markets either

Michael Noonan says the NTMA believes bond markets won’t lend to Ireland if it doesn’t have recourse to the ESM’s backup.

THE BODY responsible for managing Ireland’s national debt and securing its funding requirements has said Ireland will probably be unable to re-enter the bond markets next year if it does not have access to backup funding from the European Stability Mechanism.

Finance minister Michael Noonan that the National Treasury Management Agency believes a No vote in the Fiscal Compact referendum – which, as it stands, would mean Ireland could not access ESM funding – meant that “in all likelihood” Ireland would not be able to borrow from the more regular sources.

“I have consulted with the NTMA and they consider that a No vote in the referendum on the Stability Treaty would mean, in all likelihood, that it would not be possible for Ireland to re-enter the bond markets at a sustainable rate,” Noonan told the Dáil this afternoon.

“Availability of ESM funding is an important part of facilitating our return to the markets, as it provides reassurance for the markets,” he added.

While Noonan stressed that the NTMA’s opinion was independent and not automatically indicative of his own feelings, he agreed with its assessment that access to ESM funds was crucial in ensuring Ireland could borrow through normal means.

Noonan was responding to questions from Fianna Fáil’s Michael McGrath, who had asked Noonan to indicate the interest rate that might be applied to loans given to individual countries by the ESM.

Noonan said he would not “speculate” on how much the ESM might charge for loans, but said the principle that the EU’s lending systems operated at cost price had now been firmly engrained.

He went on to say the current bailout programme ensured Ireland was well-funded until well into the second half of 2013, and that that programme “remains on-track, based on current projections”.

“Continuation of the strong programme implementation will ensure that we emerge successfully from this programme,” Noonan said.

McGrath said the NTMA’s advice was “significant” and had come from a body held in “high regard” worldwide.

More: Large majority of voters in favour of referendum on ESM treaty

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Gavan Reilly

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