Austerity measures outlined before troika involvement in bailout

Ireland’s austerity programme was based on measures the national authorities had outlined beforehand to bring the country’s finances back under control, Finance Minister Michael Noonan has told the European Parliament that is investigating the role of the troika.

The Irish Central Bank, responding to questions from Parliament, came closest to criticising the terms of the bailout saying that some of the troika’s conditions on restructuring the financial sector were non-negotiable and had to be implemented very carefully to avoid being counterproductive.

Mr Noonan in a written reply to questions from the Parliament said that the programme reflected the previous government’s National Recovery Plan published shortly before Ireland applied for a bailout. This set out “the macroeconomic, structural reform and fiscal policies to address the crisis”.

The quarterly reviews allowed the Government to have its policy objectives reflected in the programme — such as the reversal of the cut to the minimum wage, use of privatisation receipts for employment measures, changes to the bank deleveraging targets and the ending of transfers of smaller loans to Nama.

He said, despite trying to spread the effects fairly, the measures taken affected the 10% most wealthy who lost about 15.5% and the poorest in society who lost about 12.5% of their incomes.

The Central Bank in their response to similar questions said most of what was agreed with the troika mirrored existing national policy but the troika regarded certain elements as non-negotiable.

A number of MEPs will visit Ireland next Thursday to hold discussions with the Department of Finance, the Central Bank, TDs, employers and trade union bodies as they seek to draw lessons from how the bailout mechanism worked.