THE FOUR-YEAR plan to be published at the end of the month will contain “firm policy decisions” on the cuts the Government intends to implement, Minister for Finance Brian Lenihan said yesterday.
“If you want a credible four-year plan you have to set out the difficult decisions,” he said.
He said he would not be in favour of simply setting out “spending ceilings” that would apply to the various government departments over the period of the plan.
He said that such issues as public sector pay, social welfare and other transfer payments, pension policy and investment costs were the drivers of public expenditure.
The plan would need to set out the “essential decisions that need to be made” in these areas. If the plan did not address these issues, then it would not be credible.
Asked about the growing spread on Irish bonds, Mr Lenihan said recent turmoil in the bond markets was largely due to German government comments about the possibility of European sovereign debt defaults in future EU member state rescue efforts.
Irish bond rates were suffering the most dramatic rise because of the pre-existing situation with Irish debt.
He said the Irish diplomatic service was busy seeking to ensure there was clarity about Ireland’s position in relation to its sovereign debt.
He said his announcement in September about the likely total cost of the various bank bailout measures was also met with a “wait and see” response by some in the markets.
Ireland was not the only EU state that felt uneasy about what Germany had said, he said, adding that there is to be a meeting of the EU Council of Finance Ministers in 10 days’ time where the matter would be discussed.
Mr Lenihan was speaking at a press conference to launch an Oireachtas committee report in Leinster House. Michael Noonan of Fine Gael, who was also in attendance, said the Council of Ministers needed to make a statement on the matter.
“Whatever diplomatic levers are available to you, you have to do it and you have to do it before the budget,” he said.
Former taoiseach Garret FitzGerald, who was in attendance, said the German comments had been “totally destabilising”.
Joan Burton of the Labour Party said Germany had to recognise that it could not just take the positions of larger states such as Italy and Spain into account.
“It needs to take smaller states into account if the euro zone is to survive,” she said.
Mr Lenihan welcomed the comments made in Seoul by the president of the European Commission, José Manuel Barroso, that Ireland would have support if it needed it.
