MINISTER'S REACTION:THE GOVERNMENT has met all economic, banking and structural targets for the first six months of the year that were required as part of the international rescue package for Ireland, Minister for Finance Michael Noonan said.
The “troika” of the three international bodies – EU Commission, European Central Bank and International Monetary Fund – had yesterday morning completed their quarterly review of Ireland’s performance, he said, and concluded that the country had met all its obligations under the Memorandum of Understanding.
“We have met the fiscal targets. We have met the banking targets. We have met the structural reform targets. I am also pleased that the external partners have concluded that the Irish programme is on track, and we are making good progress.”
Mr Noonan said that notwithstanding the decision by ratings agency Moody’s to downgrade Ireland’s investment grade to junk status, the country was still aiming to fully return to the markets by 2013 in accordance with the rescue programme timetable.
He qualified this by pointing to the huge uncertainties that have beset economies and banking globally over the past two years.
“Looking forward for two years to July [2013], it’s an eternity to be looking forward, given all that has happened,” he said.
Mr Noonan was at a news conference where he and Minister for Public Expenditure and Reform Brendan Howlin gave their response to the conclusion of the review carried out by officials from the troika. Both Ministers held their final meeting with senior troika officials yesterday.
Mr Noonan emphasised European governments’ view of the extent of the issue had changed dramatically in the past week.
Portraying it as a “big game changer”, he said: “For the first time since I became a Minister, everybody around the table at Ecofin [the meeting of EU finance ministers] is seeing the problem as a European problem and a euro problem, rather than, or in addition to, the problem in individual countries.
“If there’s a heads of government meeting next week, the focus will be on that problem,” he said.
The adjustment necessary in December’s budget may be more than the €3.6 billion stipulated in the memorandum, Mr Noonan confirmed. He said it was too early to say with any certainty how much more, as there were too many variables to allow the making of an accurate assessment.
“The Government’s position is we are working towards a correction target of €3.6 billion. We regard that as a minimum. We may have to go slightly above that in a correction,” he said.
He made implicit criticism of Moody’s for the timing of its ratings downgrade for Ireland.
“There were general comments of displeasure across Europe that this decision was taken.
“It’s certainly peculiar that they would have moved to re-rate Ireland within 48 hours of the adjudication of the troika of Ireland’s programme. You’d think it was reasonable to wait until today or tomorrow to see what the troika was saying,” he said.
Moody’s rating was of marginal consequence, he added, as Ireland was currently not in the markets.
Mr Howlin said the Government’s comprehensive review of spending would be in a position in the autumn to offer budgetary choices that might provide alternatives to social welfare rate cuts or increases in income tax.
On reform of wage-setting for sectors including hospitality and security, Mr Howlin said last week’s High Court ruling that joint labour committees had no constitutional basis had fundamentally altered the situation.
