A Cheann Comhairle
I am particularly pleased to be replying to this debate this evening. Last week’s decision by the Government is a historic one and marks the end not just of a programme but of a most difficult period for the Irish people.
Three years ago, our sovereignty was ceded by a Government that had squandered the most prosperous period in our history. We reached the point at which nobody would lend to us because nobody believed in the competence and word of our Government. Having spent thirty five years of EU membership, on all sides of this house, building and developing our reputation in Europe and elsewhere, to lose it in a couple of years marks, in my view, the biggest setback in our history as an independent state.
Arguably it could have been worse. As the Government imploded yet hung on to power in 2010, it was the duty of the public service to keep things afloat until a new Government could be elected. That they succeeded in doing this is evidence of their commitment and resolve.
Today, regaining our national credibility in so short a time is a testament to the will and endurance of the Irish people. Again, as I have said before, when we look back in this period from more optimistic times, we will be able to see more clearly the scale of our collective success in exiting this programme on schedule. That is not to say for an instant that there are not difficult days and decisions ahead. There are. But the threat to the very viability of the state that culminated in our entering this troika programme is well and truly behind us.
There was nothing hasty or rushed about the decision taken by Government last week. It followed extensive consultations, led by the Minister for Finance, over the last few months with all the relevant parties. It follows consideration of that feedback across Government and the responsible state agencies. And it has been welcomed by all our European partners.
I, for one, can say it is the decision that we should have aspired to. This Government was elected on one overarching promise – to reclaim our national sovereignty in as speedy a fashion as possible. In the absence of compelling reasons to do otherwise, our decision was a natural one to take.
Last week we weighed up the options facing us. As Minister Noonan has stated on more than one occasion, the decision was a finally balanced one. We were obliged to give it careful consideration. Following that, as the democratic Government, we took a decision that we were as well positioned now to exit the programme as we could possibly be in a year’s time. Our first action following the taking of the decision was to inform the Irish people through the House of their directly elected representatives.
The economic environment in which we have made this decision is good. Our bond yields are low and have remained stable since the announcement of last week. Our public finances are under control. Our targeted deficit for next year is 4.8% which will deliver a small primary surplus. We have met every fiscal target required of us thus far.
The banking challenge is a pan European one. But unlike others, our banks have already been significantly recapitalised to a higher level than that required by the European wide stress tests.
In addition, the Irish taxpayer will not be the first port of call for any future findings from the European Stress tests for the Irish banks. The Irish banks have a number of options open to them if they need to raise capital in the future.
On that point you may be aware that, today, both Allied Irish Banks and Permanent TSB successfully concluded significant funding transactions in the international debt markets, raising a combined total of €1 billion of long term funding. Both transactions, which were heavily oversubscribed, represent another significant step forward in the rehabilitation of the Irish Banking system.
Deputy McGrath asked about the conditionality that would attach to a credit line. The reality is that the Government decided, for all the reasons already set out, that there would be no application for a precautionary facility once we exit our programme. In view of that, we did not get into this issue. I would also reiterate a point made by Minister Noonan this morning which is that applying for a precautionary credit line would not actually cover the risk should a wider problem emerge in the euro area.
Both Deputies McGrath and Doherty sought clarification on aspects of OMT. In relation to OMT, it is important to be clear on one fundamental aspect, as the Minister for Finance outlined this morning. The September 2012 press statement outlining the ECB Governing Council’s decision to establish OMT outlined its technical features. According to this the purpose of OMT is: “Safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy”. It is therefore aimed at addressing systemic risks for the Euro as a whole and is not country specific in that regard. Having a credit line does not of itself guarantee access to OMT. The critical point about OMT is that its activation is a matter for the ECB acting in full independence.
On this basis the Government concluded that the time was right for a clean exit and I am pleased that that decision has been endorsed by our friends and allies.
It is understandable over the last few years, that we as a people have reflected on the catastrophe that we have endured. But, while not disregarding the challenges ahead, exiting the programme is a national achievement for which we should all take credit. It has contributed further to our international standing.
Without gainsaying the challenge ahead, we should as a country, perhaps for the first time in a while, be proud of what we have achieved and confident of our future.