TAOISEACH ENDA Kenny has rejected charges that Ireland will need a second European Union/International Monetary Fund bailout because of fears that falling growth rates will threaten Ireland’s recovery.
During a day in London, Mr Kenny relentlessly drove home a positive message about Ireland’s future, but specifically moved to dismiss Citigroup’s chief economist Willem Buiter’s warning that Ireland should have a bailout “on stand-by”.
“We are in a programme, the programme lasts for the next two years. We are meeting all of the targets and all of our commitments,” Mr Kenny said, adding immediately afterwards, “I do not share the view at all in regard to a second bailout.”
Despite predictions that the Department of Finance’s own growth forecasts cannot be met because of the EU economy’s slowdown, Mr Kenny said the figures would be achieved, but he hinted Ireland’s borrowing costs may be reduced in ongoing talks with the EU and the IMF.
“We believe that the targets that we have set will be achieved. The growth figure is a medium average. We have undertaken a series of technical discussions about improving the technical circumstances in which we find ourselves.
In Vienna, Minister for Foreign Affairs Eamon Gilmore said Ireland’s ambition was to “work our way out” of EU-IMF control, not to get a second bailout, adding: “We want to work through the programme we have, get out of it, get the country back into the financial markets.”
Insisting Ireland wants to be “the first to emerge” from the troika’s control, Mr Kenny said the Government wants to return “in a tentative way” to international bond markets next year from the second quarter onwards, though, more likely, the end of the year.
Borrowing could be sustainable at 6 per cent, he argued – compared to a current 8 per cent yield on Ireland’s existing 10-year bonds: “Even if we were to borrow at 6 per cent, the situation would improve because of the confidence people would have in the country.”
During a wide-ranging speech at Reuters’ London headquarters, Mr Kenny painted an optimistic picture of Ireland’s future, though he repeatedly acknowledged “austerity is taking its toll on ordinary people”.
Mr Kenny said the EU’s decision not to impose more losses on Greek debt holders – on top of those already in place – will help Ireland, since the prospect that further losses could be felt “was a real obstacle to my Government’s intentions to return to the markets at as early a date as possible”.
Questioned later, he said the danger of further losses for international bondholders would damage the ability of Ireland and other countries involved in EU-IMF troika rescue programmes to get back on their feet.
“Why would an investor want to invest in a country emerging from a bailout if there were likely to be debt writedowns? We have never looked for a debt writedown – we pay our way in full, and on time.”
Questioned about Ireland’s need for a referendum to approve an intergovernmental agreement among the EU-26, bar Britain, Mr Kenny said the Attorney General would not decide until a final text is agreed by March.
“When a text is produced, the AG will advise Government. If the advice is that a referendum is necessary then a referendum will be held; if the advice is that it is not necessary then it is not necessary to be held,” Mr Kenny said.
At a meeting later at No 10 Downing Street with British prime minister David Cameron, the two men agreed to hold a special meeting this year to boost British-Irish trade, which is now worth over €60 billion, he said.
The two men also discussed the difficulties posed for the financial services industry in both countries by the persistent French demands for a financial transaction tax, with Dublin fearing that unglamorous but stable back-office operations could be hit.
“Clearly we are not yet at a point where market confidence in the euro has been restored. We must ensure that more binding, durable and enforceable fiscal rules go hand-in-hand with funding certainty for countries pursuing sound and sustainable economic policies,” Mr Kenny said in a speech.