Noonan defends clean bailout exit

Finance Minister Michael Noonan brushed aside warnings from the Fiscal Advisory Council that he should have applied for a precautionary credit line from the EU’s rescue fund, the ESM.

He sounded a note of caution, however, saying that the country and the eurozone was going through a benign period.

“It’s a good period and we will monitor it very closely next year,” he said.

Claims that his decision would militate against the ECB buying the Government’s bonds through the outright monetary transaction (OMT) programme were wrong, he said. The ECB agreed, saying it was “hard to see it being used for just one country”.

Mr Noonan insisted the Government’s decision to go for a clean exit from the bailout programme had been approved by the markets, especially as the two state-owned banks had been so successful in raising public money earlier this week.

Mr Noonan said the decision would have no bearing on whether the ESM would buy Irish bonds through the OMT programme, and said the issue was misunderstood by some commentators.

He disagreed that the Government had not taken the Fiscal Advisory Council’s advice: “We go through it quite seriously and we take of lot of their advice on board. Overall, the report shows that the fiscal council approves of the overall thrust of the Government, and then they challenge us as they should on a number of issues — if the Fiscal Council and the Government were fully in agreement it would be pretty pointless, and they would lose credibility.”

The council was established as part of the new EU rules to provide independent advice and prevent the country “going down the primrose path as it did when it was led by Fianna Fáil and the Greens — nobody wants that to happen anymore”.

The Government reached its decision having taken advice nationally and internationally, he said. He was convinced it had taken the right decision and the fact that the markets had not reacted and that there was no negative reaction from credit rating agencies was positive.