Michael McGrath (Cork South Central, Fianna Fail)
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Question 32: To ask the Minister for Finance his views on the potential impact here of the ongoing Eurozone debt crisis, in particular, on Ireland's prospects to have a successful export-led recovery, on the planned return to the international sovereign debt markets late next year and on Ireland's overall debt sustainability; and if he will make a statement on the matter. [34883/11]

Michael Noonan (Limerick City, Fine Gael)
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GDP data for the first half of 2011 confirm that recovery is under way. Growth is being driven by the traded sector, with exports of goods and services increasing by more than 6% on an annual basis in the first quarter and, despite weaker levels of activity in our main trading partners, by close to 5% in the second quarter. These strong levels of export growth partly reflect the very significant price and cost adjustment that have taken place and which are testament to the flexibility of the openness of the Irish economy. Given the openness of our economy, we will not escape unscathed from what is happening overseas. That said, the acyclical nature of some Irish exports and further competitiveness improvements will have some mitigating effects. Exports are still expected to grow by 3.8% in 2012.

There is no doubt that the external environment is becoming less benign and that this is a cause for concern. Uncertainty surrounding global growth prospects has increased since the middle of the summer, while the eurozone sovereign debt crisis has intensified. As a result, international organisations are in the process of revising down their short-term macroeconomic projections for many economies, including our main trading partners. This obviously has implications for Ireland's growth prospects. Consequently, in the medium-term fiscal statement published earlier this month, the Department of Finance revised its forecast for GDP growth in 2012 to 1.6%, down from 2.5% at the time of April's stability programme update. From our perspective, and that of the euro area as a whole, it is crucial we move forward as quickly as possible with implementing the decisions announced by the euro area Heads of State or Government on 26 October. Swift implementation will instill confidence and underpin the euro area recovery.

As regards Ireland's return to sovereign debt markets, based on the forecasts set out in the medium-term fiscal statement, the State has access to financing to cover its needs for the next two years. Nonetheless, it is the aim of the National Treasury Management Agency to return to borrowing markets at some point in 2012. To ensure that we can regain access to sovereign debt markets, it is vital that we continue to deliver on the terms of our EU-IMF programme of financial support. This means proceeding with the budgetary adjustments that will bring our deficit back to a sustainable level while continuing to implement the necessary reforms that will improve the economy's competitiveness. In doing so, we will create the correct conditions for fostering jobs and economic growth, which will, in turn, benefit the fiscal position and reinforce the sustainability of the State's debt.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his response. There appears to be no end to the crisis in the eurozone. The markets do not appear convinced the new Governments in Greece and Italy will deal seriously with the problems being experienced by those countries. Elections are to be held in Spain this weekend and elections are on the horizon in Germany and France. Most people are forming the conclusion that the crisis poses an ominous threat to our economic recovery. People are now fearful that Ireland's place in the euro or, the euro as we know it, may not be as secure as we all believed it to be.

The medium-term funding of this State will need to be clearer this time next year. That would be the advice of the National Treasury Management Agency, NTMA. In light of the ongoing developments in the eurozone and given the exceptionally challenging external environment, what is the latest advice of the Minister from the NTMA in regard to when Ireland is likely to return in a meaningful way to the sovereign debt markets for long term borrowing to meet this State's long-term funding needs?

Michael Noonan (Limerick City, Fine Gael)
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The Deputy is correct to point to the volatility of the situation in Europe, a situation that has been volatile for some time now. This obviously has an adverse effect on economic growth, real and forecasted. It is hoped that as things proceed there will be a settlement. The Deputy is correct that the situation remains volatile, which is disappointing from Ireland's perspective given we are fulfilling all of the objectives of our programme and are working hard to get out of the difficulties we are in.

In regard to when we will return to the markets, the NTMA remains of the view that Ireland will return to the markets during the second half of 2013.

Michael McGrath (Cork South Central, Fianna Fail)
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2012.

Michael Noonan (Limerick City, Fine Gael)
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It plans to enter the markets earlier than that but with a view to testing the market rather than being fully funded. The Deputy will note that the secondary market is volatile and responds with reasonably large movements to small levels of purchasing or selling. It is difficult to know what will be the appropriate bond price for Ireland until such time as the market has been tested.

Michael McGrath (Cork South Central, Fianna Fail)
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Has the Minister received a commitment from the European Central Bank, ECB, that it will use its powers to purchase Irish sovereign debt on the secondary markets in order to ease our passage back into the markets? Does the Minister envisage this will happen in a meaningful way? Given the downgrading of exports by the Irish Exporters Association and, as the Minister has acknowledged, the market conditions remain exceptionally turbulent, what level of borrowing does he anticipate the NAMA will be able to engage in next year, in order to ease our passage back to the markets?

Michael Noonan (Limerick City, Fine Gael)
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I have not sought any commitment from the ECB about the secondary market. Because we are not in the primary market at this stage it would be premature to have any such discussions. The NTMA is of the same view it has held for the past number of months that it will be possible to get back into the market around the date I indicated and it has not changed its position in this regard.