Tuesday, 7 June 2011
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.
-----or below it. The question is, what happens in mid or early 2013 when we have to go back into the markets when we have no other choice. We can go back next year, but we will have no choice in 2013. What happens if the rate is above the rate that is being cut on the EU-IMF package? Is there any possibility that we would have to go and seek an extension of the bailout, as we already have it or through another mechanism or combination from the ECB, the EU or the IMF? If the bond rates do not fall below 5.8%, will that be our only option or is it, at least, a possibility?
The Minister spoke of credibility and Members on this side of the House have credibility. I am sure he would agree the Taoiseach also has credibility. Is it damaging for the State when the Taoiseach states clearly that the State has funding to meet all requirements until the end of 2013? Given the Minister has blown that argument completely and utterly out of the water, does the Taoiseach, in making such statements when the international markets can do the sums as they have calculators at their desks, discredit and undermine the position of the State when they see him bluffing at such a high level?
It is not the college debating society. Winning the argument does not get one anywhere. We are trying to take this country from the situation it is in, where it has lost sovereignty over its economic and financial affairs. We are trying to keep people at work. We are trying to keep the health services, education services and the criminal justice system intact. We want our people to continue to be paid, we want the kids to go to school and we want the ill to go to hospitals to be cured. It is not going to be easy. I am optimistic by nature. My job, as a member of the Government, is to take it forward day by day, week by week, month by month, so that we get ashore, we get out of the situation we are in and we get back to where we have economic growth again, where our debt is declining and is eventually wiped out, where our banks are recapitalised and where they are performing and lending the credit stream necessary to give us growth. That is what we are doing and we are working at it every day for the past three months, and we have made very considerable progress.
All I can do for Deputy Doherty is lay out the facts in front of him. If he wants to scaremonger and frighten the children, and talk about the bogeyman coming down the chimney in two years' time, he should go right ahead and do so. I prefer to try to encourage people to be a bit confident to get back to work, to all pull together in the interests of this country, have a sense of solidarity and, I believe, we will get there.
Deputy Doherty can give me all the arithmetical puzzles he likes, but what I will do is lay out the facts. We have the support of the IMF stating we will achieve the targets in the bailout package. The Commission states we will achieve the targets. Our colleagues in Europe openly state now, publicly and privately, that we are totally different from Greece and Portugal and that if we stick with it and if we get some growth in the economy, we will succeed.
There is a simple decision to be made. Deputy Doherty can put his strength at the end of the rope and pull with us or he can stay with the knockers and keep knocking, but what we are going to do we are going to do.
I agree with the Minister that it is about arguing based on the facts and it is also about having a clear and consistent message because we need to know where we stand. Based on what the Minister stated today which is contrary to what was stated last week, which was that we were funded through to the end of 2013 and into early 2014, which clearly is not the case, and based on any reasonable analysis of the facts, does the Minister accept we will need to know where we stand in the early part of 2013 on the funding of the day-to-day running of the State?
Would the Minister be able to confirm that by the time we get to 2013 the State will still have cash reserves available that we will have the ability to draw upon if we so decide? Second, in the questioning from the other side of the House, they might make clear what they would do differently and where exactly they would source the money to fund the State between now and 2013.
I want to make a point. We have been going through questions here - Questions Nos. 21 and 22. We went along to Question No. 27. We are repeating ourselves. We are hearing the same thing. Then we jumped to Question No. 30. I have colleagues sitting here dying to get in on Question No. 29.
-----that we impose burden sharing on senior bondholders. Just a number of days ago, €200 million was paid by the State to unguaranteed unsecured bondholders in Anglo Irish Bank. The Minister of State, Deputy Brian Hayes, has argued for senior burden sharing on those bondholders. We have the stress tests. Does the Minister not believe that we would reduce the liability of the State by imposing burden sharing on senior bondholders, at least on the unguaranteed unsecured ones in Anglo Irish Bank the likes of which €200 million was paid out to in the past number of days?
As I stated, I will put the facts before Deputy Doherty. The facts are now that we are running a balance of payments surplus, exports are at an all-time high, people are going back to work in the exporting manufacturing companies but, of course, there is not enough work there for everybody who requires it. The tourism industry is finding its feet again-----
-----as a result of the reductions in VAT. We knew the visit of foreign dignitaries would give a great boost. I am saying to Deputy Doherty that he can keep knocking and keep talking it down as much as he likes, but we on this side of the House are going to try to rescue the country from the situation it was in when we came into Government and one may be with us or against us.