Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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Question 17: To ask the Minister for Finance if he has received any counsel or consultation on the Pact for the Euro; the measures that will presented at the European Council meeting as those pledged to be implemented under the pact for the first year; and if he will make a statement on the matter. [5409/11]

Michael Noonan (Limerick City, Fine Gael)
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The President of the European Council, Herman Van Rompuy, held bilateral consultations with member states, including Ireland, in relation to the pact for the euro in the run up to the meeting of Heads of State and Government on 11 March last. The proposed pact focuses primarily on improving growth and competitiveness in the euro area. It outlines objectives in the policy areas of competitiveness, employment, the sustainability of public finances and the reinforcement of financial stability.

The bilateral preparatory discussions were wide ranging and took place against the background of the comprehensive package of policy measures to strengthen EMU which is under preparation for this week's European Council. The pact for the euro is due to be formally adopted by the Council tomorrow. In the context of the new European semester, member states will outline plans for the next 12 months in their national reform and stability programmes which are to be submitted to the EU Commission by end-April. This new timetable is intended to assist member states to take better account of the EU dimension in the preparation of budgetary and economic policies.

Assuming the pact is agreed as planned, we will incorporate its overall objectives as appropriate in our national plans. As the Deputy will be aware, however, Ireland's budgetary and economic strategy must be viewed in the context of the EU-IMF programme. The Government has confirmed its commitment to returning order to the public finances and to achieve a deficit of less than 3% of GDP by end-2015 in line with the agreement with the ECOFIN Council. It is also the case that our recently agreed programme for Government differs in terms of the detail of the policies which this Government plans to adopt within the broad fiscal targets. I have committed to discussing any consequent proposed changes to the programme with the IMF, European Commission and ECB and in this context the forthcoming review of the programme provides such an opportunity. It is clearly understood that any changes to the EU-IMF programme that have cost implications will have to be compensated for with alternative measures.

Pearse Doherty (Donegal South West, Sinn Fein)
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As the Minister stated, the pact for the euro to which we will agree tomorrow commits the State to announce specific measures. These are concrete commitments to be achieved in the next 12 months. What commitments will the Government will make on behalf of the people? What concrete commitments are laid down? The pact also refers to the need for these concrete commitments to be included in the national reform and stability programme to be submitted in April. There is a short window. Commitments must be given tomorrow and they must be in the new programme submitted by April. What are the concrete commitments that the Government will enter in to on behalf of the people?

One of the points that has come out of the pact for the euro is the establishment of the European stability mechanism, ESM, a new fund to come into effect in 2013. This new fund alters the way money will be paid to the funds it will replace and capital will be required upfront. What is the timetable for the gradual payment of the capital to the ESM? What amount of money will this State have to pay to this fund? Over what period will this capital have to be paid? I understand it will be paid at a no-interest cost and then, when we want or need it back, we will be charged above the market value. What will the cost to the State be and over what period with the establishment of this new funding mechanism, the ESM?

Michael Noonan (Limerick City, Fine Gael)
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The general approach on the pact for the euro is made up of measures to increase competitiveness, which are strongly endorsed by the German Government and have the support of all the AAA-rated countries in Europe, measures to promote greater economic growth and job creation and measures to have a sustainable public finance regime. There is nothing in place we cannot buy into immediately. The ways and means may be difficult but this is the way forward. The Deputy is correct about the new fund, the European stability mechanism, ESM. It will replace the European financial stability facility, EFSF, in due course but not until 2013. There were various discussions on how it would be funded. One can put in capital, there is callable capital and there are guarantees in the hierarchy. Of three options, the one which puts in the most capital upfront was the most acceptable because it gets a AAA-rating from the credit ratings agencies and is more likely to be sustainable.

I will send the Deputy a note on the cost to Ireland. I recall the figures represented to us were approximately €1.7 billion over four years, starting in 2013. However, if there is no drawdown from the fund - it is a contingency - Ireland will get dividends on the money. On the other hand if there is a drawdown, the equivalent will be paid back into the fund. Over the spread of the period involved it is not a heavy imposition from Ireland's point of view and it is important that the fund is in place.

The Deputy has a strong interest in these matters. Let us consider the issue overall. What happened was that Europe organised a common currency area but those involved did not put in place the architecture for protecting it at the time they initiated it. Effectively, they are retrofitting the architecture now. We have been unlucky because our crisis has occurred before the response mechanisms have been put in place. The new fund will be significant. As well as allocating money to euro countries in trouble, it will be able to buy sovereign bonds on the primary market. It also has a provision that received no coverage in the media, such that the Finance Ministers of the eurozone countries will be governors of the funds and they may alter the policy instruments of the fund as they see fit. It has the organic potential to put in place a great many tools or policy measures to protect the eurozone post-2013. This is one of the most significant developments that has taken place. If we had our crisis in 2015 or 2016, much of the architecture of the euro land would be in place. The crisis hit and when the architecture was tested it was insufficient and the policy instruments were not in place. They are now being retrofitted and Europe is chasing very hard to catch up. In this context, much progress has been made.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Questions Nos. 19, 27 and 28 will be taken together.