Michael Noonan (Limerick City, Fine Gael)

I propose to answer Questions Nos. 27 and 30 together.

As the House is aware, the joint EU and IMF programme of financial support provides for a total financial package of €85 billion. Within this total amount, €67.5 billion comes from external sources and the remaining €17.5 billion comes from the State's own resources, namely the National Pensions Reserve Fund and other domestic cash sources. Some €35 billion of the total €85 billion financial support package was originally set aside for the banking sector, with the remaining €50 billion available for the purpose of financing the State. However, the recent stress tests carried out by the Central Bank indicated that the full €35 billion will not be required. As a result, the budgetary forecasts contained in the recently published stability programme update prudently assume that an additional €15 billion of the funding originally earmarked for the banking sector is now available for use for sovereign purposes, bringing the potential total available for sovereign purposes to €65 billion.

Based on the forecasts recently produced in the stability programme update, the combined Exchequer deficits for the years 2011-13 are estimated at €48.5 billion. Maturing long-term and short-term Government debt over the same period amounts to €27 billion, including an assumption for some short-term debt funding. Factoring in Exchequer deficits and maturing debt, it is estimated that the State's funding requirement in 2013 will be approximately €22.5 billion.

The purpose of the EU and IMF programme of external funding is to provide us with the time to restore our public finances and repair our banking system so that we can regain international confidence and re-enter funding markets. As we are barely half a year into our programme, it is very early in the process. We are meeting our targets, however, and as long as we continue to do so there is every chance that the programme will achieve its objectives.

The stated intention of the National Treasury Management Agency is to return to the sovereign markets as soon as the market conditions permit. The steps necessary to enable such a return include resolution of banking sector issues, continued progress in the reduction of the budget deficit in line with the targets agreed in the EU and IMF programme of financial support and the implementation of policies that will see us return to sustainable economic growth. A key development in that regard was the publication of the results of the bank stress tests on 31 March last. The stress test and the associated recapitalisation exercise were well received by investors and rating agencies. The National Treasury Management Agency is in constant contact with market participants. It will advise me when it feels that the time is right to re-enter the markets. Based on conservative projections of our funding needs and taking account of funding possibilities, there is no urgency about a return to the markets. Based on current projections and assuming no market access, the State has access to sufficient funds for its needs into the second half of 2013.

See this speech in context