Seanad debates

Thursday, 4 November 2021

Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Report and Final Stages

 

10:30 am

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

That may be so, but a safety net is only credible if it recognises that countries might not need it because their national finances are sound and resilient. How would a credit net be realistic or credible if a country in excellent economic condition, with very low debt, in surplus year to year and a growing economy with multiple sources of employment and income growth and no macroeconomic imbalances, also qualifies for use of the safety net? The very nature of a safety net is that it will have criteria for access and there will be countries that will not need it. I do not believe that in order for a safety net or a credit line to be credible, all countries have to be able to immediately qualify for it. There will always be countries that, by dint of their national budgetary policies and the decisions they make, may not need to qualify for it.

As regards the Covid-related points made by the Senator, the reason it ended up being the case that no countries had a need to access the Covid precautionary credit line in particular was the success of all the other things the European Union did, such as the decision the Commission made with regard to activating the general escape clause, the decision the European Central Bank made through its pandemic emergency purchase programme and the role of the support to mitigate unemployment risks in an emergency, SURE, programme. For me, particularly in the context of the Covid environment we are in, the fact that the ESM was not called in is purely a consequence of the success of other interventions by the European Union and the national buffers that many countries, including Ireland, had built up before this awful disease hit.

I thank the Senator for raising the various issues she has highlighted. Issues of accountability and the relationship between the Executive and the Parliament are better dealt with outside the legal framework we are currently debating. In any event, I do not believe it would be practically possible in the event that the ESM was called into action or that the treaty we are discussing predetermines the outcome of the political process that is under way in respect of the stability and growth pact.

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