Ireland exits Troika Bailout Programme end 2013 – what next?

golfwallah

We are currently on target to exit the Troika Bailout programme at the end of this year: http://www.irishtimes.com/business/economy/public-finances/ireland-passes-latest-troika-bailout-review-1.1467674

Austerity or “Tough Love” has taken us so far – like lobsters being cooked slowly, people seem to be getting used to the fact that we have to pay our way in the world. Or have we?

What happens next – more of the same, at least until growth starts to have a significant impact by growing the tax take needed to service both interest and capital repayments?

Or will we be able to go back to the markets – and at what price?

And what role will Europe play in setting up better systems to make finance available and to ensure better risk management and accountability in channelling investment productively?

GCU Flexible Demeanour

I'd say there's still quite a lot of unresolved business around debts in the banks. Aren't there already hints that there will be a "backup" Programme II.

The scope for new lending into the economy has to be profoundly limited, particularly in the light of likely measures to resolve existing debts. How could any bank issue large amounts of new loans for personal dwellings if the debt is effectively unenforceable? How could they issue debt to SMEs, if those debts similarly can't be enforced in the event of default? I'm not sure that point is ever made clearly enough - the tendency is to talk as if writing-off existing debts is a necessary prelude to new lending. However, generous measures for existing borrowers undermines the basis for future lending.

That's just to focus on one, expensive, issue. Unfortunately, we haven't seen structural change in our economy. Hence, I'd expect our economic freedom to the short-lived.

hmmm

What next? As usual the Irish government will go back to handouts to favourite constituencies once the adult supervision leaves. The markets will supply us with enough drug...money until the next crisis, at which time we will beg for more help.

People will also suddenly realise what the Fiscal compact referendum meant (which I support btw) and there will be moaning and wailing about "we were never told what this really meant, what do you mean we can't spend spend spend."

RichardAnd

Many months ago, I was listening to Breakfast Business on Newstalk. The presenter mentioned a report wherein it was claimed that Noonan had released some sort of statement on the budgetary plans for the post-bailout era. According to the radio host, there post bailout budgets would be austerity budgets akin to those already passed and they would continue for several years.

Before anyone asks, I have no source to back up the above. I checked the story out after I arrived in work but I was unable to find a link to support anything said. It's a strange story but take it for what it may or may not be.

In my opinion though, there will not be any great change when the bailout term comes to an end.

GCU Flexible Demeanour

RichardAnd wrote: »

Many months ago, I was listening to Breakfast Business on Newstalk. The presenter mentioned a report wherein it was claimed that Noonan had released some sort of statement on the budgetary plans for the post-bailout era. According to the radio host, there post bailout budgets would be austerity budgets akin to those already passed and they would continue for several years.

Could it be this?

http://www.irishtimes.com/news/politics/stringent-economic-plan-to-replace-troika-programme-1.1407164


Minister for Finance Michael Noonan will bring a proposal to Cabinet shortly to develop a stringent new economic plan to replace the troika bailout programme.

The State’s anticipated exit from the bailout this year will not mean a relaxing of austerity targets as Mr Noonan hopes Government will approve a fresh regime with firm timelines similar to the EU-IMF-ECB programme.

slegs

What Next? Sure we do what we always do.

Make FG the bad guys for applying the medicine, have collective amnesia and vote the FF clowns back in to spend like crazy.

Its called The (Irish) Circle of Life

Cody Pomeray

slegs wrote: »

What Next? Sure we do what we always do.

Make FG the bad guys for applying the medicine, have collective amnesia and vote the FF clowns back in to spend like crazy.

Its called The (Irish) Circle of Life

when has this happened previously?

hansfrei

slegs wrote: »

What Next? Sure we do what we always do.

Make FG the bad guys for applying the medicine, have collective amnesia and vote the FF clowns back in to spend like crazy.

Its called The (Irish) Circle of Life

Did you read the sindo back pages? The wikileaks documents that fingers happy Gilmore? His dramatic (planned) turn around on yhe Lisbon2 referendum.

Where you there when FG/Labour decided to break every promise made before election?

There's no chance FG are not complicit in the ruination of this economy.

NoCrackHaving

Will exiting the bailout actually have any real affect on levels of employment? As far as I can see all the last 5 years has done to Ireland has seen unemployment sky rocket with little economic growth. The economy is flat lining and the only solution proposed is more austerity? I'm not criticising it neccessarily but when will we actually begin to recover?

Count Dooku

NoCrackHaving wrote: »

Will exiting the bailout actually have any real affect on levels of employment? As far as I can see all the last 5 years has done to Ireland has seen unemployment sky rocket with little economic growth. The economy is flat lining and the only solution proposed is more austerity? I'm not criticising it neccessarily but when will we actually begin to recover?

Recover from what?
The only problem what Ireland has is that everybody lives in assumption that property bubble is normal state of Irish economy

NoCrackHaving

Count Dooku wrote: »

Recover from what?
The only problem what Ireland has is that everybody lives in assumption that property bubble is normal state of Irish economy

High levels of unemployment mostly. Unless having 15% of the population unemployed is seen as 'normal'. I certainly don't think that a property bubble is 'normal', nor do I think 'everyone' does.

Unemployment levels below 10% and more likely between 5-7% are what we should be aiming for with 1-2.5% employed in construction like a normal economy.

golfwallah

According to the Indo, Finance Minister, Michael Noonan, has announced that we're looking for a €10b overdraft "safety net" from the Troika to cover us when the current bailout ends this year, while we go back to the markets:
http://www.independent.ie/business/irish/well-need-a-10bn-bailout-safety-net-29557178.html

Terms of the overdraft are to be "trashed out" with the Troika, after the budget in 5 weeks time.

Government is hoping not to have to draw on this €10b facility, so I guess the "powers that be" are confident that the market will provide the balance of funding required to run the state, while spending continues to exceed income (even with "austerity").

Whether or not the markets will lend money to Ireland at affordable rates after 31/12/2013 remains to be seen! But either way, it looks like "austerity" is here to stay.

Good loser

Colm McCarthy says
'The budget deficit will be around 7% of GDP this year. One way or another it will be zero inside the next few years, for the simple reason that nobody will lend to the Irish State while the debt mountain continues to grow.

Unsustainable debt trajectories will not actually happen - that is what 'unsustainability' means. But govt politicians seem to be preparing the ground for some backsliding from the target adjustment of €3.1 bn contained in the troika programme. This will be dressed up in the language of 'stimulus' and justified in terms of somehow helping to boost employment.

The longer the budget gap is permitted to survive, the greater the risk of trouble in the bond market, on which the Irish State must exclusively rely from January onwards.

Backsliding on deficit reduction targets is dangerous and could result in a sudden withdrawal of access to market borrowing at some unknown point over the next few years.'

Couldn't have put it better myself!