EU and IMF give green light to Government plan

THE EU and IMF have given the Fine Gael-Labour coalition the green light to implement its Programme for Government, Finance Minister Michael Noonan has said.

They have also accepted that the Government should wait for stress tests on the banks to be completed before pumping more money into them.

Senior officials from the EU, ECB and IMF completed a two-day visit to Ireland with a meeting with Mr Noonan and Public Expenditure Minister Brendan Howlin at the Department of Finance.

The Central Bank released the range of economic scenarios on which the stress tests are based.

In an “adverse” scenario, house prices will decline by 17.4% this year and 18.8% next year — meaning a total fall of 60% since the market hit its peak in 2007.

The economy would shrink by 1.6% this year before seeing marginal growth of 0.3% next year.

The Central Bank will use this and other data to analyse how much additional capital the banks need to withstand further hits, with the stress test results due to be published on March 31.

Under the EU/IMF bail- out, the banks were due €10bn in immediate recapitalisation last month, but Brian Lenihan postponed the cash injection until after the election.

Mr Noonan said the main element of the discussions yesterday was the Government’s desire to swap measures it disliked in the bailout agreement with alternatives.

“They have agreed to that principle… But, of course, the condition all the time is that what’s taken out and what’s put in must have the same fiscal effect,” he said.

Specific changes will not be hammered out until next month, when the “troika” are due back in Dublin to carry out a formal review of the progress being made.

Meanwhile, the European Commission published plans for a Common Consolidated Corporate Tax Base.

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