Successful completion of Quarter 4 2011 Review of the EU/ IMF Programme

Scofflaw

No major surprise, I suppose:

Ireland has successfully concluded the final quarterly programme review mission for 2011 with the EU Commission, the ECB and the IMF. In each quarter Ireland has consistently achieved all of the targets set under our programme of assistance.

The review mission that has been ongoing since 10th January has assessed fiscal developments, the macroeconomic outlook, progress on commitments in the restructuring of the financial sector and in structural reform. The review also allows for discussions between Government and the external partners on changes to the Programme of Assistance, which will improve its effectiveness by supporting the economy’s potential to grow and create jobs.

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

“I and my Government colleagues are pleased that the staff mission has assessed the programme to be on track and that all measures in the programme have been fully implemented. This successful outcome illustrates the ability of the Irish State to implement a challenging programme effectively.

The fiscal consolidation targets were achieved by a significant margin – the General Government deficit is expected to be under 10% as compared to a target of 10.6%. This consolidation was achieved in tandem with returning the economy to growth after three years of contraction.

In addition, to the achievement of the public finance targets, all of the targets in the financial sector were also met. The most significant of these was the achievement of the deleveraging targets with total deleveraging across Government supported banks of €40.5 billion to end-November as compared to a 2011 target of €34.7 billion. The two pillar banks sold €15 billion of assets at significantly better prices than anticipated in the PCAR/PLAR 2011 exercise. In addition, quarter 4 saw positive deposit flows for Irish banks in a very difficult eurozone environment.

The Government is fully committed to putting our economy and public finances on a sustainable basis. Assisting the private sector to create jobs is our primary goal. We are broadening our tax base so as to ensure that we have the available funds to pay for the high quality public services that our citizens require. The Government wants to make sure that that the provision of quality public services is not subject to the every whim of the international money markets.

The Government is fully aware that there is much to do in relation to our primary goal – to get Ireland back working. I and my colleagues are speedily implementing the budget measures that are targeted at key growth sectors within our economy. In addition, the Government will be shortly setting out additional measures under the Pathways to Work initiative and the Action Plan for Jobs”

Minister Howlin on the conclusion of the visit stated;

“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 that the programme succeeds and for us to return to the market. A substantial number of actions under the programme, some 90, have been successfully completed to date. These measures have been designed to enhance the sustainability and competitiveness of the Irish economy.

We have made substantial progress since taking office; expenditure was significantly reduced in 2011 and this downward trend will continue in 2012 as Departments focus on priorities, increase efficiencies and reduce waste. Furthermore we have reformed the budgetary process including the new Medium Term Expenditure Framework and work which will further assist in better budgetary planning and management of resources for the coming years.

We have considerably reduced the paybill and significant further reductions are planned for 2012 as public service numbers are reduced and as we reduce additional costs. These actions along with the implementation of our ambitious public service reform plan will yield significant benefits in terms of savings for the State and provide more cost effective, integrated, customer-focused public services.”

Both Ministers concluded:

“We welcome the fact that our programme remains on track and we continue to meet all our targets. Since the last review the 2011 exchequer returns confirmed that we comfortably met the deficit targets in the programme and we have introduced a budget which continues this sustainable path for our deficit. This is an essential step towards regaining economic stability, ensuring the sustainability of the public finances and providing the platform to deliver sustainable growth and jobs.”

There were a number of changes agreed to the Memorandum of Understanding, which include:
The fiscal responsibility bill is to be published by quarter 2 2012.
The publication of the Personal Insolvency legislation was deferred to end-April
The future direction for ILP will be made by end-April
Amendments will be introduced to strengthen the EROs/REAs legislation, to strengthen the inability to pay clause
PCAR 2012 – the results will be published in co-ordination with EBA no later than end-November 2012

Recent Economic Developments and Outlook

The economic recovery has slowed after solid growth in the first half of 2011

Deteriorating external conditions pose risks in 2012, and to ensure the achievement of programme objectives we will continue to refine the program and maintain our record of strong policy implementation

Fiscal Policies

The substantial fiscal consolidation targeted for 2011 has been achieved by a significant margin.

We will implement Budget 2012 in the same prudent manner, while cushioning the impact on growth.

The general government deficit is firmly set on a declining path to below 3 percent of GDP by 2015.

Achievement of the ongoing fiscal consolidation will be underpinned by a coherent set of budgetary reforms:

Institutionalization of the CRE process
Performance-Based Budgeting
Reform of Allowances, Overtime, and Sick Leave
Public Service Reform

Furthermore, we are developing important institutional fiscal reforms consistent with the European framework.

Financial Sector Policies

We will continue to press forward with reforms to restore the health of the Irish financial system and address the challenges remaining

Major progress in downsizing our banking system was made in 2011, and we are working to refine the deleveraging framework to minimize risks to lending to the economy and discourage excessive competition for deposits.

For PCAR 2012, we plan to maintain the distinctive rigor and standards of PCAR 2011, especially the independent loan loss forecasts, while aiming to align its timing with the EBA’s EU-wide stress test.

The 2011 financial statements of the banks covered by the ELG will be prepared on the basis of new more conservative and realistic provisioning and disclosure guidelines

We will complete by end-June 2012 the recapitalisation of ILP. We are finalizing the determination of the way forward for ILP.

We are implementing our strategy to restore the viability and solvency of the credit union sector.

We are finalizing relationship frameworks with the covered banks to ensure their core businesses will be run on a commercial, cost effective and independent basis designed to ensure the value of the banks as an asset to the State.

We have made significant progress toward strengthening banks’ boards

We continue to enhance banking supervision and supervisory capacity.

We are promoting efforts by lenders to address loan arrears and unsustainable debt, thereby reducing uncertainty regarding bank assets and facilitating a recovery in domestic demand

Reforms to the personal insolvency framework will underpin the resolution of unsustainable debt while safeguarding Ireland’s traditional debt service discipline.

Steps are also being taken to help SMEs, including those facing financial difficulties.

An effective credit register is an essential building block for sound lending decisions and is a valuable supervisory tool.

Structural Reforms

An ambitious programme of structural reforms to support job creation, increase Ireland's competitiveness and boost potential growth is being put in place.

We will take steps to strengthen activation and training policies to help jobseekers get back to work under the new Pathways to Work.

Reforms in the water sector is underway, together with a strengthening of competition policy enforcement.

Programme Financing

The programme remains well financed, and we are continuing preparations to regain market access as envisaged.

That's the government statement, mind. The Troika press conference is at 2pm, and should be available webcast through the IMF and EU Representation here.

cordially,
Scofflaw

_Kaiser_

Aren't we all just great boys n girls so!

Gold stars for Enda and co I guess - more (ridiculously outlandlish by the day) taxes for the rest of us. The country can continue to fall apart socially and economically as long as we're meeting "our" commitments!

Yep, proud to be Irish alright today - we've served our "betters" well :rolleyes:


Euroskeptically yours..
Kaiser2000

Noffles

What exactly is the big deal about being a 'shinning light of debt repayment'... there should be no pats on the back about this.. the country is well and truly ****ed and will be getting ****ed good and proper for the foreseeable future.

femur61

CPA protected again and we've to pay more taxes to cover wages. Yes, yes I know PS must pay them as well but I'm sure their increments will cover any new taxes.

later12

I wouldn't be one for the old patriotism, but I think Irish people should be really proud of the way they're keeping their heads down and co-operating on this.

Excluding the cost of the banks, we are still spending 138% of our total revenue at a time when we're effectively locked out of the debt markets. I think most people are realistic about that quite frankly, and it's a credit to their reason and to the Government that they're getting on with it.

AlekSmart

Scofflaw wrote: »

No major surprise, I suppose:

Reforms in the water sector is underway, together with a strengthening of competition policy enforcement.

That's the government statement, mind. The Troika press conference is at 2pm, and should be available webcast through the IMF and EU Representation here.

cordially,
Scofflaw

This one-liner was what jumped off the page at me....

I'm mindful of Phil Hogan's smiley face beaming over the headlines of thousands of "New" jobs associated with the move to "Introduce a Water Regulation" frame work to old Ireland.

I'm equally mindful that in our nearest neighbour the "Privatization" of its water systems remains arguably the most succesful of all Baroness Thatchers policy achievements.

By golly did that good Lady greatly enrich a few good men...and the privatization of water continues to do just that.

Mr Hogan's little gameplan will see us all stepping up to the plate and within a short time-frame paying a LOT more money for our water,initially to some State connected "Independent" regulator,but after a decent interval,to yet another European Mainland "big-player".

More than anything else in recent times,I see the Water issue as the Big-Sticker item which will enrich few but pauperize many !

Head The Wall

later10 wrote: »

I wouldn't be one for the old patriotism, but I think Irish people should be really proud of the way they're keeping their heads down and co-operating on this.

Exsqueeze me, I thought most people voted for a change last election time not more of the same which is what we are getting. I think if you ask most people they will not be happy with the way FG/Lab are going about this.

Liam Byrne

Head The Wall wrote: »

later10 wrote: »

I wouldn't be one for the old patriotism, but I think Irish people should be really proud of the way they're keeping their heads down and co-operating on this.

Exsqueeze me, I thought most people voted for a change last election time not more of the same which is what we are getting. I think if you ask most people they will not be happy with the way FG/Lab are going about this.

+1

FG & Labour have betrayed my votes and I'd revoke them if I could.

Going Forward

No surprise indeed.
At times like this I wonder just what use the independent TDs are; instead of ANY valid protest from them, they seem content to advise the electorate to gain criminal convictions by not paying now legal new taxes/charges.

I also question just what quality of financial/economic advice the last Government accepted in agreeing to EVERY single term and condition of the loan agreement.

Had no one the sense to see that the Trinity also needed Our cooperation to ensure that their and others investments would return a profit and also help ensure that other European banks would remain safe/profitable?

Its not like the deal was even done at a cheap cost/interest rate/term even after which I doubt the country will be in the top choice for any investors, and our CT rate is now coming under repeated scrutiny from our partners.

I, like others, am also fearful of the privatisation of state assets; if its such a great idea why not privatise An Garda Siochana while we are at it?

Going Forward

Head The Wall wrote: »

Exsqueeze me, I thought most people voted for a change last election time not more of the same which is what we are getting. I think if you ask most people they will not be happy with the way FG/Lab are going about this.

I agree, they are paving the way for Sinn Fein success in future elections.

At every turn there is political discussion as to what can be taxed next.

later12

Head The Wall wrote: »

Exsqueeze me, I thought most people voted for a change last election time not more of the same which is what we are getting. I think if you ask most people they will not be happy with the way FG/Lab are going about this.

I think they may not be happy with some of the specifics, but they understand the need to bring spending closer in line with income; they understand why we cannot simply default on our sovereign debt, and they understand the need for a viable banking industry.

These policies, however necessary, are never going to be popular, but at the moment, they are very much suitable. And I think the public know this, and that's why they are 'getting on' with it.

If the public wanted a boldly and markedly different set of policies, they would never have voted for Fine Gael and Labour. They would have elected a grand coalition of the left. Instead, over half of the votes counted in 2011 went to FF or FG.

_Kaiser_

later10 wrote: »

I think they may not be happy with some of the specifics, but they understand the need to bring spending closer in line with income; they understand why we cannot simply default on our sovereign debt, and they understand the need for a viable banking industry.

These policies, however necessary, are never going to be popular, but at the moment, they are very much suitable. And I think the public know this, and that's why they are 'getting on' with it.

If the public wanted a boldly and markedly different set of policies, they would never have voted for Fine Gael and Labour. They would have elected a grand coalition of the left. Instead, over half of the votes counted in 2011 went to FF or FG.

You're giving the electorate far to much credit in my opinion.

It was pretty much an "anyone but FF" free-for-all in the last election hence why we have parties like SF that did so well out of it (not that I have anything against them.. like them or not, at least they don't just blindly accept all the spin from the other side of the room unlike a lot of our "opposition" parties/TDs).

Also Enda and co promised change and like suckers we believed him. Instead, bearing in mind of course that he IS a teacher, all we got was a schoolboy who goes to get his copy filled with another gold star by Headmistress Merkel every few months.

Meanwhile the rest of us "get on" with it simply because we have realised that political parties in this country ARE all the same - in it for themselves alone and to keep the gravy train at the top running at full steam.

The point being that it's not an acceptance that "this is what needs to be done", it's despair at our lack of credible alternatives politically speaking.

Head The Wall

later10 wrote: »

I think they may not be happy with some of the specifics, but they understand the need to bring spending closer in line with income; they understand why we cannot simply default on our sovereign debt, and they understand the need for a viable banking industry.

Hold up there a second, they are not bringing spending in line with income. They are trying to increase their income to match their spending which is a completely different thing. I do also understand that people don't pay enough income tax in Ireland so yes they are targeting some areas for added revenue. I'm in the UK like yourself and I will be paying 3.5 times more out of my wages to the govt than I was at home.

Ireland increased spending by 140% over a few years and we are now back to tax income from 8 years ago but still spending like we still have 2007 tax incomes, maybe I'm a but thick but I don't see them collecting enough taxes to bridge the deficit gap. They need to tackle spending properly

ardmacha

Ireland increased spending by 140% over a few years and we are now back to tax income from 8 years ago but still spending like we still have 2007 tax incomes, maybe I'm a but thick but I don't see them collecting enough taxes to bridge the deficit gap.

This is about right 2007 expenditure and 2003 taxes. However, the composition of expenditure is different than 2007. Less is being spent on PS salaries (masked to some extent by dogdy stats that don't include the pension levy), a lot less on capital expenditure and other non pay. But much more is spent on welfare. If present welfare expenditure is a short term thing to tide people over than you borrow to pay for it. If unemployment remains this high then the whole structure of the public finances will have to change.

I think 2011 showed that Ireland can take advantage of any buoyancy in international trade. 2012 won't be so good as the international situation is poorer, but one imagines that the international economy will rebound in time. If it doesn't, not only Ireland is kiboshed.

later12

Head The Wall wrote: »

Hold up there a second, they are not bringing spending in line with income. They are trying to increase their income to match their spending which is a completely different thing.

Bringing income in line with spending is the same thing as bringing spending in line with income; both are a matter of alignment.

I haven't seen any updated projections on spending in relation to revenue, but yes it would seem based on previous estimates that the overall trend, taking capital and current spending into account, will be overwhelmingly to generate revenue as opposed to slashing expenditure while revenue remains stable.

Head The Wall

later10 wrote: »

Bringing income in line with spending is the same thing as bringing spending in line with income; both are a matter of alignment.

If you are Just looking at the bottom line, then yes. The difference is how the govt achieves that bottom line figure, they are trying to tax their way out of this recession.

later12

Anticipating larger revenue is not the same as 'taxing your way out of the recession'. Increasing tax is only one variable. Revenues can also increase when a labour market becomes more competitive, when exports increase, and so on.

When the department of finance makes its exchequer projections, it does not just look at changes to tax heads. It also looks at external assumptions, like global growth forecasts, currency and commodity expectations and the wider economic environment and how these impact on domestic indicators like consumption, the trade surplus, employment, and other factors that contribute to the exchequer.

In a line: tax increases are not the same as revenue increases.

If you want evidence that spending cuts are projected to be larger than tax increases over current period of adjustment as far as 2015 (at the least) then you need look no further than the medium term fiscal statement, which posts the following figures.

Head The Wall

I wouldn't call this a good solution, this is not the way to be making savings, we have at least 6,000 excess admin and 1,000 excess HR staff in the HSE and we are getting rid nurses and frontline staff. The CPA is really working well :mad:

New figures have revealed that 3,500 personnel will have left the HSE between last September and the end of February. 1,700 of the staff leaving are nurses and 50 are consultants, according to Department of Health figures in today’s Irish Times.

“Frontline services cannot be maintained with this scale of redundancies. The loss of nurses in particular will mean a serious reduction in services for patients”.

“Minister Reilly has signalled his intent to tinker with the bureaucracy at the top of the HSE – without reducing the 110 senior managers on salaries of over €110,000,”

later12

I could have sworn those goalposts were someplace else

Scofflaw

Head The Wall wrote: »

I wouldn't call this a good solution, this is not the way to be making savings, we have at least 6,000 excess admin and 1,000 excess HR staff in the HSE and we are getting rid nurses and frontline staff. The CPA is really working well :mad:

These are softly-softly let's not upset the PS unions measures - voluntary redundancies are an attempt to reduce the wage bill while avoiding cutting the posts that need to be cut, because that would be involuntary and upset the unions. And if the wage bill goes down enough to meet our targets, then we can avoid the necessary surgery, because the troika can only enforce the targets, and can't interfere in the political decisions.

There will be a degradation of services, of course, but compared to the effect of strikes it will be nebulous and diffuse...except of course to those who need those services.

cordially,
Scofflaw

murphaph

Scofflaw wrote: »

These are softly-softly let's not upset the PS unions measures - voluntary redundancies are an attempt to reduce the wage bill while avoiding cutting the posts that need to be cut, because that would be involuntary and upset the unions. And if the wage bill goes down enough to meet our targets, then we can avoid the necessary surgery, because the troika can only enforce the targets, and can't interfere in the political decisions.

There will be a degradation of services, of course, but compared to the effect of strikes it will be nebulous and diffuse...except of course to those who need those services.

cordially,
Scofflaw

This is basically the rub of it, shameful and all as it is. Frontline staff should not protect surplus to requirements admin staff and management, but in the world of the unions that is what happens.

As a result, frontline staff will face an increased workload while surplus to requirements admin and management will be twiddling their thumbs.

It's crazy stuff and it's all guaranteed by the CPA. The people to suffer are the service users and also the frontline providers who will be getting it in the neck as they are the visible side of the system. Arguably they deserve to be getting it in the neck seeing as they (in the form of the unions they form) want this "one for all and all for one" approach.