Ireland’s government claims it will be able to stretch the funding received from the EU-IMF bail-out to the end of 2013 – and postpone a return to the bond markets.
Minister for Finance Michael Noonan claims the Irish economy is in a healthier state than anticipated when the bail-out was first negotiated.
Noonan now claims there is enough funding in the EU-IMF bailout programme to last longer than anticipated.
He made the claims as Prime Minister Enda Kenny’ administration instructed all government departments to ‘consider bold and unpalatable measures to ensure savings in the coming years’.
According to the Irish Times, the head of each department received a letter over the weekend to that effect from the secretary general of the new Department of Public Expenditure and Reform, Robert Watt.
The letter stated that ‘new measures to achieve cost savings, including the outsourcing of services to the private sector, should be considered in the drive to get spending under control’.
The government is now actively working to stretch the bail-out funds to the end of 2013 to avoid a costly return to international lending markets.
The measures under urgent consideration include the privatization of State assets to raise funds.
Minister Noonan said on Sunday that Ireland has sufficient funding under the bailout programme to withstand all eventualities until the middle of 2013.
He also believes that there is ‘a strong possibility of having extra money for the second half of 2013’.
The EU-IMF deal ring fenced a figure of $50billion for the recapitalization of the Irish banks but only $34billion will be needed for this purpose on the back of burden sharing measures with bond holders.
Savings from the bank recapitalization programme will be transferred to the budget deficit.
The Minister again claimed that the new problems with the Greek economy will not affect Ireland’s recovery.
“There is a consciousness about contagion but certainly the authorities I have spoken to believe they can prevent contagion spreading to Ireland and Portugal but they have some concerns about the bigger European countries and they are going to draw the line there,” said Minister Noonan.
“I think what is happening at present is that Greece is going to do enough to have the additional money voted through and then their future is in their own hands.
“But we will continue to draw the distinction between Ireland and Greece. Ireland is not Greece. Our debt is way lower than Greece.
“We are back growing again. We have an open economy and we are into export-led growth and we are going to continue drawing that distinction and rely on the guarantees we are getting from Europe that there won’t be a contagion effect.”