Written answers

Thursday, 21 March 2013

Department of Finance

EU-IMF Programme of Support Issues

Photo of Sandra McLellanSandra McLellan (Cork East, Sinn Fein)
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To ask the Minister for Finance if he will provide a planned date for when Ireland will no longer be subject to post-programme surveillance having repaid at least 75% of the financial assistance it has received from other member states; and the effects of this post-programme surveillance and the way any move to prolong the maturities of EFSM and EFSF loans will affect this period. [14068/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As part of its response to the global economic and financial crisis, the EU has adopted a number of measures. The first of these is EU2020, the EU’s growth strategy for the decade which aims to make the EU a smart, sustainable and inclusive economy. This was followed by the European Semester to which was added the Euro Plus Pact and the so-called ‘six-pack’ which came into effect on 13 December 2011. The ‘six-pack’ is the name given to a legislative package, comprising five regulations and one directive, designed to reform and strengthen the Stability and Growth Pact and to introduce new macroeconomic surveillance.

The proposed ‘two-pack’ - on which political agreement has recently been reached at EU level - is a further step in this process and is, to a great extent, a natural extension of the measures contained in the ‘six-pack’. It will be applicable to euro area Member States only. The first proposed regulation in the two-pack relates to ‘the monitoring and assessment of draft budgetary plans and on ensuring the correction of excessive deficits’. The second proposed regulation under the two-pack is on the strengthening of economic and budgetary surveillance and sets out explicit rules for both enhanced surveillance and post-programme surveillance. As part of this proposed regulation, a post-programme surveillance process will be put in place and maintained for a Member State until the balance outstanding under EU-sourced financial assistance falls below 25% of the total. This covers all EU funding sources, including bilateral loans. Under the terms of this draft regulation, the Commission shall conduct, in liaison with the ECB, regular review missions in the Member State under post-programme surveillance to assess its economic, fiscal and financial situation.

I should add that under the new governance rules of the EU and in particular the Euro area, a greater degree of oversight will be required for all participating Member States in the future in any event. Taking account of lessons of the recent economic and financial crisis, this should underpin a stronger Euro zone and be of benefit to all.

Given that EU Finance Ministers at Eurogroup and ECOFIN on 4/5 March 2013 discussed an adjustment of the maturities on the EFSF and EFSM loans to Ireland and Portugal it is not possible at this time to give the duration of post programme surveillance. The Eurogroup and ECOFIN agreed to ask the Troika to come forward with a proposal for their best possible option for both Ireland and Portugal for EFSF and EFSM loans. In addition, on Saturday last, 13 March, Eurogroup Finance Ministers agreed to an adjustment of the maturities of Ireland’s and Portugal’s EFSF loans.

Work is continuing at official level on the adjustment of the maturities for Ireland and Portugal. In the case of the EFSM loans, this will require discussion and agreement of the EU 27 Finance Ministers, and I expect this matter will be discussed by them in the coming weeks. However, until a final decision by Ministers on the length of any maturity adjustment is taken, and the details of its implementation are known, it will not be possible to assess the impact of such changes on the duration of the enhanced surveillance procedure.

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