Ireland determined to stick to the bailout pay plan

STICK to the plan, and don’t get your hopes up. That was the message delivered by the troika yesterday at the conclusion of its latest review of Ireland’s bailout programme.

There’s a crunch summit of EU leaders on Sunday at which they will be under pressure to find some way of easing Greece’s debt crisis and preventing further contagion in the eurozone.

A definitive solution may not emerge on Sunday, however. Finance Minister Michael Noonan frankly admitted yesterday that, on the basis of what had been communicated to him, there was no solution in sight yet.

He also quipped that there was probably more information in “the financial pages” of the papers about the outlines of possible solutions than there was from official channels.

That says something about the chaos in Brussels, Berlin and Paris as the EU heavyweights continue to fight fires.

Nonetheless, what does seem widely accepted at this stage is that there will have to be large write-downs of Greek debts — even if the way to do that has yet to be found.

One might assume, if there is such a write-down, that Ireland would also stand to benefit from a similar reduction in its debts.

But the ECB, which has consistently opposed the idea of debt write-downs, made it very clear yesterday that Ireland should not get its hopes up.

While European Commission official Istvan Szekely said he would consider how any decisions arising from the weekend summit could be applied to help Ireland, the ECB representative, Klaus Masuch, sought to firmly dampen any optimism.

Ireland was successfully implementing its bailout programme, he said, and restoring its credibility in the process.

The country should therefore continue to adhere to the programme, he said, because Irish debt levels were sustainable.

“I’m fully convinced debt in Ireland is sustainable and can be paid back and can be serviced by the Government,” he said, citing Ireland’s credibility, competitive export sector, well-educated workforce, and demonstrated ability to rein in spending and hike taxes.

“Casting any doubt on (repaying) would be very foolish from the point of view of Ireland because it would destroy credibility and confidence in your own economy, in your own banking sector and in your own programme,” he said.

One might expect the Government to look at his comments and resent the stern lecture to keep paying, no matter the political and social cost.

But the Government was on the same page — albeit for a different reason.

Mr Noonan was keen to stress that Ireland was not Greece, and that Ireland could — and would — repay its debts. But his reason for repaying is to avoid the type of additional punishment inflicted on Greece because it has failed to meet the terms of its bailout.

Mr Noonan asked Public Expenditure Minister Brendan Howlin to list some of the additional austerity measures being forced on Greece — such as the suspension on reduced pay of 30,000 public servants. The latest measures have prompted more riots in Greece, and needless to say, the Government desperately wants to avoid such a scenario here.

So if EU leaders agree some write-down for Greece and decide to extend it to Ireland, fine. But regardless, the Government will stick to the terms of its programme, and continue meeting the targets within.