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TheJournal.ie’s progress report for the Government: Banking and the IMF/EU deal

It’s possibly the single biggest issue facing the government – but how has it dealt with the troika deal and banking in its first year?

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan
Image: Laura Hutton/Photocall Ireland

1) WHAT THEY SAID DURING THE 2011 ELECTION CAMPAIGN

  • Labour and Fine Gael both proposed burning of bondholders. Labour believed bondholders should share in losses. Fine Gael specifically said “certain classes” of bondholders should share in the cost of recapitalising the banks.
  • Labour’s manifesto stated: “(We) will insist on a full and proper investigation into the blanket bank guarantee.”
  • Labour leader Eamon Gilmore famously promised: “This election is about a choice to be made by the Irish people about whether our budgets and our financial affairs are going to be done Frankfurt’s way or the way that the Labour party is proposing.”
  • Fine Gael’s Leo Varadkar also famously promised: “All I can say to the Irish people – some of whom may be watching tonight – is that if things go our way there will be a new government in six weeks time and the banks aren’t getting another cent.”

2) WHAT THEY SAID IN THE PROGRAMME FOR GOVERNMENT

  • On the bailout, the government pledged to “renegotiate a more credible package”
  • It promised to establish a Strategic Investment Bank that would lend to small and medium-sized business, invest in innovative companies and raise finance for infrastructure projects
  • It promised that any investigation into the failures in the bank system that are adequately resourced.
  • The programme stated: “The outgoing Government’s “blank cheques for banks” policy must now be ended.”

3) PROGRESS – OR LACK THEREOF – IN FIRST YEAR OF GOVERNMENT

  • The government has successfully renegotiated a reduction in the combined interest rate it is paying on its EU/IMF loans as well as the length of the repayments. But overall the deal and the measures to be implemented remain much the same as when they were negotiated by the previous government.
  • The government announced a Strategic Investment Fund last December as a precursor to an actual bank but Fianna Fáil claimed at the time that the Taoiseach’s remarks that a bank “would be difficult to implement in the current market conditions” have effectively killed off the idea.
  • There has been as yet no investigation into the banking sector established by this government though the Nyberg reportwas heavily critical of the banks, government and regulators when it reported last April. The government could argue the defeat in the referendum to hand more investigative powers to Oireachtas committees had hampered its efforts to probe the banks.
  • The “blank cheques for banks” policy may have been ended but the government continues to honour the promises made by the last government, paying €1.25 billion to unsecured Anglo bondholders last month. It is scheduled to make another payment at the end of March but has seemingly committed to reducing that burden though not forgoing it altogether as some economists argue it should.

Read all sections here: HOW DID THE GOVERNMENT DO IN ITS FIRST YEAR? THIS IS HOW >

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About the author:

Hugh O'Connell

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