THE FOLLOWING IS the full text of a statement issued this lunchtime by Michael Noonan and Brendan Howlin after the sixth Troika inspection.
Ireland has successfully concluded the sixth review of the Programme with the EU Commission, the ECB and the IMF. In line with each of the previous five quarterly reviews Ireland has continued to achieve all of the targets set under our programme of assistance.
As part of the review mission, which begun on 16th April, there has been a detailed assessment of fiscal developments, the macroeconomic outlook, progress on commitments in the restructuring of the financial sector and in structural reform. The review also provides for discussions between the Government and the external partners on adapting the Programme of Assistance, which improves its effectiveness by 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 that we have met our targets, all measures have been implemented and the programme is on track. This successful outcome illustrates, once more, the ability and the commitment of the Irish State to implement a challenging programme effectively.
Economic data released since the last Troika review in January has shown that the Irish Economy has returned to growth in 2011, the first time since 2007, our underlying deficit for 2011 is 9.4% – significantly ahead of the target of 10.6%, our tax take is growing and we are on track to meet our 8.6% deficit target in 2012.
Over 100 actions have been completed under the programme and over 70% of the available funds have been drawn down. Stability has been restored to the public finances, a range of structural reforms have been introduced and the financial sector is refocused on meeting the needs of the Irish economy.
As well as examining programme implementation over the past quarter over the course of this mission we have begun to examine measures to strengthen the focus on growth. The revised MoU contains a commitment to strengthen the growth pillar of the programme.”
Minister Noonan stated:
“Agreement has been reached, in line with the programme commitments, on the strategic direction for Permanent TSB, with a formal Restructuring Plan to be submitted to the European Commission by the end of June. The objective of this plan is to create a viable retail bank focused on lending into the Irish economy. This will be achieved by carving out a viable bank from the current Permanent TSB business.
On the wider banking sector we remain committed to preparing our banks for the future and ensuring their capital strength. The Government’s overall objective is to return the banks to private ownership and to maximize the return on the taxpayer’s investment in the banks.
Stability is being restored to the banking sector, relationship frameworks have been introduced, deposits have stabilized and the deleveraging programme is on target. The normalization of our banking system is an ongoing process. Reflecting this more normal situation the Central Bank will align the next PCAR exercise with the EBA stress tests that will be held in 2013.
The banks’ focus will be on more normal operations such as mortgage and SME lending, tackling the problem of mortgage arrears and debt recovery. Ireland continues to have the most prudent capital requirements of any European country. The steps outlined above reinforce our key objective of getting credit to the domestic economy and helping to create jobs and growth.”
Minister Howlin on the conclusion of the visit stated;
“For the sixth consecutive review Ireland has met the challenging targets under the programme. We are committed to achieving economic recovery and creating more jobs. We have agreed with the Troika that a higher proportion of the proceeds from the sale of state assets will be used to support jobs and economic growth. The exact quantum (above the 1/3 of proceeds already agreed) is yet to be determined but I am confident that we will be successful in this regard. We need to implement the plan but also we need economic stimulus and growth; I welcome the acknowledgement of our troika partners of the importance of the growth agenda to the overall success of the programme.
Over the course of the quarter there has been a considerable reduction in the numbers in the public service which will deliver long term sustainable paybill savings. Furthermore, we will continue to actively manage expenditure and I am confident that we will adhere to our spending targets in 2012 as we did in 2011.
The programme is a process and we have made significant progress in our first year; including a reduction in the interest rate that will save us €10 billion, restoring the minimum wage and we are putting in place legislation to underpin Joint Labour Committees.
I welcome the endorsement by the troika that Ireland has met all targets to date and the programme remains on track. The Government is committed to meeting our targets under the programme as continuing to do so is the best way of ensuring Ireland succeeds and for us to return to the market and fund ourselves independently.”
Both Ministers concluded:
“We welcome the fact that our programme remains on track and we continue to meet all our targets. In the first quarter 2012 we have seen robust tax returns and we continue to control our public expenditure. There remains a challenging road ahead but we remain fully committed to reducing our deficit to 3% of GDP by 2015 and we are confident that the 8.6% target for 2012 will be met. This Government is focused on creating jobs and restoring Ireland’s economic sovereignty; the successful implementation of the programme as well as endorsing the upcoming stability referendum will put us on this path.”