Key Features of Revised EU/IMF Memorandum of Understanding

Scofflaw

Revised MoU as agreed last night - key points.

Financial Sector Policies

We are moving forward with purpose to put the banking system on a firm footing for the future so it can become an enabler of the economic recovery.
We have therefore completed a comprehensive assessment of the capital and liquidity conditions and needs of domestic banks.
On the basis of this rigorous analysis, we have adopted a comprehensive strategy to reorganise and reform the domestic Irish banks.
There will be no further transfer of assets to NAMA

Restructuring of the Financial Sector

The domestic banks will be substantially reorganised to ensure that they will provide the economy with the services and credit it needs.
We have started the process of resolving the unviable banks.

Deleveraging
We are targeting a significantly smaller and more robust banking system while avoiding fire sales.
To achieve this goal we are establishing a strong framework for the management, governance, and monitoring of deleveraging.
Progress with deleveraging will be demonstrated in future reviews of the program, taking into account relevant market conditions.
The implementation of deleveraging will be subject to ongoing review. #
NAMA 2 assets will not now be required to be transferred to NAMA. Alternative deleveraging plans will be developed by the banks for these assets.

Recapitalisation of the Banking System
The PCAR found that a further €24 billion was required to ensure a sound capital basis of the banks.
Recapitalisation will be completed in a timely manner and will allow for burden sharing with junior bond-holders and the possibility of additional private investment to minimise the cost on taxpayers.
We are therefore promptly undertaking the steps needed to execute the bank capitalisation.
Consistent with the substantial State resources invested in the banking system, responsibility for the banking sector within the government will be reorganised and strict governance standards for state-owned banks will be adopted.


Strengthening the Banking Framework
We are addressing underlying weaknesses that led to the banking crisis. This will involve:
Continuing to enhance banking supervision.
Ensuring that banks adopt prudent policies to address the deterioration in asset quality.
Ensuring sound bank lending and risk management.
Enhancing the quality and availability of credit information available to credit providers
The PCAR in 2012 will be timed to coincide with the EBA stress test.
We will improve asset recovery procedures by addressing weaknesses in the personal insolvency regime strengthening NAMA.
Finally, we are improving our crisis preparedness.

Fiscal Policies
Ireland faces significant adjustments to ensure that debt remains on a sustainable path and to win back access to market funding.
Our immediate priority is to support enterprise, restore confidence to the economy and get people investing and spending to create jobs.
We will seek to ensure that future fiscal consolidation is fair and does not over burden those most in need.
The Comprehensive Spending Review announced last week will ensure best value for money for all taxpayers.
We are undertaking institutional fiscal reforms to firmly anchor the sustainability of public finances:
we will establish a Fiscal Advisory Council to provide an independent assessment of public finances.
The Fiscal Responsibility Bill, to be submitted to Dáil Éireann before end 2011, will reform the budgetary framework.
we will introduce by end-December 2011 binding multi-annual expenditure ceilings with broad coverage.
The Programme for Government contains proposals for reforms to Ireland’s budgetary framework and the Department will organise a seminar in May 2011 to allow for discussion of policy options.
We are taking proactive measures through the Social Welfare and Pensions Bill to reduce our long-term pension liabilities.

Structural Reforms

Product and Labour Market Reforms
We are adopting policies to lower costs in sheltered sectors, thus boosting purchasing power and underpinning further competitiveness gains.
The Government is due to consider a potential programme of asset disposals based on the Programme for Government and the Review Group on State Assets and Liabilities. The Government will discuss its plans with the European Commission, the IMF and the ECB when it has finalised its response to the Review.
We are committed to create conditions conducive to job creation through the Jobs Initiative, which will be announced in May.
The reversal of the cut in the minimum wage will be reversed with the effect on business costs being offset by a reduction in employers' PRSI.
The review of the EROs/REAs and other measures to increase competition in sheltered sectors of the economy (these measures are not conditional on each other but are partof a comprehensive package designed to make work pay and improve the competitiveness of the economy).

Programme Financing

Taking account of the lower banking recapitalisation cost, we are requesting that the timing of drawings from the EU and IMF be adjusted.

Programme Monitoring
Progress in the implementation of the policies under the programme will continue to be monitored through quarterly and continuous performance criteria, indicative targets, structural benchmarks, and quarterly programme reviews and compliance with requirements under the Memorandum of Understanding on Specific Policy Conditionality.

cordially,
Scofflaw

Debate Ireland

The Irish people deserve a referendum on the bailout and the IMF-EU loan arrangement. The people should have the choice.

[MOD]Website pimping is not acceptable. Link deleted.[/MOD]

RichardAnd

Debate Ireland wrote: »

The Irish people deserve a referendum on the bailout and the IMF-EU loan arrangement. The people should have the choice.

We don't need a referendum. Only two months ago, we had a general election in which the electorate gave a mandate to a government who promised to renegotiate the bailout, not to reject it. Thus, the current government have been approved by the people to carry out what needs to be done as regards the bail out; we have voted on it.

However, if indeed an referendum were to be put to vote on the bail out it would likely make little difference. If people voted no, they would need to understand the rejection of the bail out would mean the books need to be balanced now, not over a course of several years. They would also need to understand that not taking the bailout isn't simply a case of saying "we're not paying" and the issue ends there.

Of course, a no vote in any such referendum would simply be treated like the no votes to Nice and Lisbon so this really is a dead pony.

dan_d

Debate Ireland wrote: »

The Irish people deserve a referendum on the bailout and the IMF-EU loan arrangement. The people should have the choice.

A choice of what, exactly? That we get money and the country keeps running, or that we don't get money and it shuts down?

A referendum is all very well, but too many people would use it as a chance to give 2 fingers to the EU/IMF/FF for all their perceived wrongs, without having any understanding of what the consequences of their "no" vote would be for the country.

As for that memorandum...is it a bit low on detail, or is that just my initial impression???

Scofflaw

dan_d wrote: »

A choice of what, exactly? That we get money and the country keeps running, or that we don't get money and it shuts down?

A referendum is all very well, but too many people would use it as a chance to give 2 fingers to the EU/IMF/FF for all their perceived wrongs, without having any understanding of what the consequences of their "no" vote would be for the country.

As for that memorandum...is it a bit low on detail, or is that just my initial impression???

Those are just the "key features", and only released last Friday, so I suspect a more detailed document will be available in a while.

cordially,
Scofflaw

Prakari

There are three proposed solutions that people are aware of in the mainstream:

1. Stay with the EU/IMF deal
2. Debt restructuring/Default
3. Leave the Euro and create a national currency under the same monetary rules

The time to have a referendum is when the average person has rejected each of these proposed solutions and is in search of a credible one.

aftermn

"There will be no further transfer of assets to NAMA"

Should we read anything into this? Is it a reflection on NAMA's lack of accomplishment or on the "new" position of the banks?