NTMA: No vote would mean no return to markets

A no vote in next week’s referendum would mean “in all likelihood” that Ireland would not be able to return to the bond markets next year, according the National Treasury Management Agency.

Finance Minister Michael Noonan said the agency, which manages the country’s borrowing, has given him its “considered advice” that a rejection of the fiscal compact treaty would likely trigger the need for a second bailout.

Mr Noonan told the Dáil the advice “concurs with” his own views.

He said access to the EU’s proposed permanent bailout fund, the ESM, is “an important part of facilitating our return to the markets as it provides reassurance to the financial markets”.

The yield on nine-year bonds is 7.35%, compared to the 3.5% interest being charged on bailout funds.

“The IMF has indicated that it will provide funding to Ireland only as part of a European initiative,” said Mr Noonan. “I have consulted with the NTMA and I consider that a no vote on the referendum on the stability treaty would mean in all likelihood that it would not be possible for Ireland to re-enter the bond markets at sustainable rates.”

The EU-IMF bailout is due to run out at the end of 2013 and Ireland will need €36bn in 2014 and 2015 to run the country.

His comments came as the no side warned voters that it would be almost legally impossible to undo harsh fiscal commitments in the treaty if it is passed.

Sinn Féin said that agreement would be needed from other EU states to release Ireland from its obligations if it was passed.

Finance spokesman Pearse Doherty dismissed a defence by the Government that the treaty’s details would only be enshrined in law and not word for word in the Constitution. Its approval by voters would tie future government’s to strict budgetary terms, he said.

“In plain English this means that once ratified it will be almost impossible to extra ourselves from the legal obligations arising from the austerity treaty.”

Sinn Féin also want the Government to veto the EU’s future bailout fund, the European Stability Mechanism (ESM), which countries that approve the treaty will be able to access.

A Red C poll yesterday found that 72% of voters were in favour of holding a further referendum on whether Ireland should ratify the ESM fund.

The poll, commissioned by the EU democrats, found that supporters of parties backing the yes campaign were mixed on opting for such a vote.

About 73% of Labour voters want an ESM referendum while only 52% of Fine Gael voters were in favour of such a vote.

Enda Kenny said the result of next week’s vote would have crucial implications that went beyond this government and even the next general election.

“These are very challenging times. And nobody who ever occupied this office, that I am privileged to hold, has ever had to face the scale of the economic challenge that we face now,” he said.


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