merrion street

Irelandhas successfully concluded the seventh review of the Programme of Assistance with the EU Commission, the ECB and the IMF.  In line with each of the previous six quarterly reviews,Irelandhas continued to achieve all of the targets set under our programme.

This review mission has involved a detailed assessment of the fiscal position, the macroeconomic outlook and progress on the restructuring of the financial sector and broader structural reforms. The review also provides for discussions between the Government and the external partners on adapting the Programme of Assistance, to improve its effectiveness in supporting the economy’s potential to grow and create jobs. 

On welcoming the successful conclusion of the review, Minister Noonan and Minister Howlin stated:

 “We are pleased to confirm that halfway through the programme we continue to meet all our targets.  All measures have been implemented and the programme remains on track. This successful outcome illustrates, once more, the ability and the commitment of theIrishStateto implement a challenging programme effectively. 

Growth figures officially published this morning show that the Irish economy experienced solid growth of 1.4% in 2011. Also our latest Exchequer returns show that our 2012 tax take continues to grow. Taken together this data shows that we are on track to meet our 2012 deficit target of 8.6%.  However, significant challenges remain, especially the unacceptably high unemployment levels, which highlight the scale of the challenge.” 

Minister Howlin stated:

“There are three strands to our recovery; taking control of our public finances, dealing with the burden of banking related debt and generating domestic growth and confidence.

 Last week, the President of the European Investment Bank (EIB) visitedIrelandand we successfully secured funding for our schools programme. We intend to continue to work with the EIB to secure significant investment in job rich projects. It is essential that the Government takes every opportunity to generate sustainable domestic growth.”

On the conclusion of the visit, Minister Noonan stated:

“The real test of the success of the programme will be our ability to emerge from the programme and return to the markets at reasonable rates.  A lot of progress has been made in this regard since the last review. The NTMA has held a successful 3 month T-Bill auction with strong international demand and at encouraging yields.

The specific reference in the communiqué from the Heads of State and Government meeting at end June to improving the sustainability of our programme is a significant advancement.  This advance has been reinforced by the commitment of the Eurogroup to assess measures to improve the programme’s sustainability by October.  As part of these measures, my Department is undertaking technical work with the Troika to build on the substantial work already undertaken. We are working intensively to ensure the best possible outcome forIrelandin line with the October timeframe.”

Both Ministers concluded:

“We welcome that our programme remains on track and we continue to meet all of our targets. In the first half of 2012 our tax returns have been more robust than expected and we remain fully committed to reducing our deficit to 3% of GDP by 2015. While this is very welcome and our performance to date is a credit to the Irish people; we cannot lose sight of the difficult decisions that remain.  It is essential that we continue to control public expenditure so as to bring about the necessary stability to allow for economic growth and investment.”

ENDS

• An indicative timetable for asset sales is in place. The Government will provide progress reports in the next two quarters on the steps being taken to prepare for asset sales to commence in 2013.
• To help tackle the high and persistent rate of long-term unemployment the Department of Social Protection will continue to build on progress so far in enhancing our labour market activation services. The Department will take steps to
• increase the number of unemployed referred to training courses and employment supports in order to reduce the risk of long-term unemployment,
• o       improve the ratio of vacancies filled off the live register, and
• o       ensure engagement with employment services as a pre-condition for receipt of jobseeker payments.
• Measures to address the emerging spending overruns in the health sector are to be specified before the end of September 2012.
• The Industrial Relations (Amendment) Bill 2011 will be further advanced through the legislative process by end-September 2012.
• A report on the impact of labour market reforms to sectoral wage-setting mechanisms undertaken under the programme is to be provided by end-June 2013.
• The Department of the Environment, Community and Local Government and the Department of Social Protection will report on housing assistance reform, in particular on the introduction of the new Housing Assistance Payment. The Department of the Environment, Community and Local Government will also report in September 2012 on progress towards the transfer of water services provision from local authorities to Irish Water and the roll-out of a domestic water metering programme.

• The Troika noted the progress made in relation to the reduction of ELG exposure and that the State intends to continue to work with the banks to reduce this contingent liability. This is also an important issue for the international markets’ investors and will help the State back to the bond market.
• The banks’ deleveraging is in line with or slightly exceeding forecasts and will be assessed against the existing nominal targets for disposal and run-off of non-core assets in line with the 2011 Financial Measures Programme.  Fire sales and excessive deleveraging of core portfolios will be avoided so as not to impair the flow of credit to the economy.
• The loan to deposit ratio (LDR) will be replaced with a Net Stable Funding Requirement benchmark. This will help alleviate some of the pricing pressures on the deposit market, and allow the banks to adopt a broader perspective on their funding base.
• PTSB’s restructuring plan continues to be developed and progress will be made over the coming quarter.
• Draft guidance for the creation and subsequent holding of liquidity buffers will be established once the Capital Requirements Directive is finalized.
• Specific features of the methodology for capital assessment will be agreed by the end of March 2013.

The ongoing process of enhancing fiscal reporting has been formalized in the programme.