Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Question 79: To ask the Minister for Finance the criteria that will be used for the debt sustainability analysis under the European Stability Mechanism; the person that will be conducting this review; the provisions being made for situations when post 2013 the ESM find that a country's debt burden is unsustainable; and if he will make a statement on the matter. [9644/11]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the European Council has agreed on the need for euro-area Member States to establish a permanent stability mechanism: the European Stability Mechanism (ESM). The ESM will be activated by mutual agreement if it is indispensable to safeguarding the financial stability of the euro area as a whole. The ESM will assume the role of the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM) in providing external financial assistance to euro-area Member States after June 2013. Access to ESM financial assistance will be provided on the basis of strict policy conditionality under a macro-economic adjustment programme and a rigorous analysis of public-debt sustainability, which will be conducted by the Commission together with the IMF and in liaison with the ECB. The beneficiary Member State will be required to put in place an appropriate form of private sector involvement, according to the specific circumstances and in a manner fully consistent with IMF practices.

The criteria for the debt sustainability analysis to be conducted under the ESM are not set out in the Term Sheet for the ESM which was agreed by the European Council and sets out the main elements relating to the establishment, governance, funding and functioning of the ESM. There is no definitive means of determining debt sustainability as it is predicated on a range of factors, including assumptions regarding future economic growth, the stock of debt and interest costs. A key determinant in the stabilisation of the debt ratio will be the narrowing of the gap that currently exists between revenues and expenditure through further fiscal consolidation.