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Irish report
by Euro Reporter
2012-07-14 11:04:46
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Ireland to unveil stimulus package

Dublin is to unveil a multibillion euro stimulus package later this month in an effort to kickstart its flagging economy and curb unemployment as it presses the eurozone to take over a large chunk of bank-related debts to aid its recovery. Michael Noonan, Ireland’s finance minister, said on Wednesday that the troika of international lenders – the European Central bank, European Commission and the International Monetary Fund – had approved the stimulus measures as long as Dublin does not breach its spending limits.  “It will be like a parallel capital budget geared towards projects that enhance the capacity of the economy to be more productive, including road and school projects,” Mr Noonan told the Financial Times in an interview. Figures published a day ahead of schedule by Ireland’s national statistics office and carried by Irish media on Wednesday show the Irish economy contracted by 1.1 per cent in the first three months of the year, compared with the last quarter of 2011. A combination of a slowdown in export growth owing to the eurozone crisis and a depressed domestic economy has caused the unemployment rate to climb steadily to 14.9 per cent.

Mr Noonan said the stimulus package would be financed mainly through funds that would not increase the country’s debt. He said the National Asset Management Agency, the state agency set up to clear toxic property loans off bank balance sheets, would invest €2bn to refurbish property. The European Investment Bank, funds from Ireland’s national pension fund and the proceeds from the sale of state assets would also be used to fund job-rich initiatives in a programme that would be spread over four or five years, said Mr Noonan. “As long as we can fund [it] off balance sheet and don’t break our expenditure limits in individual departments we have room to invest,” he said. Mr Noonan said he was pressing for a deal with European authorities for relief on Ireland’s €64bn bank debts that would reduce the country’s sovereign debt below 100 per cent of gross domestic product and help the country to re-enter international bonds markets in early 2013.

“Our debt will peak at around 117-120 per cent of GDP next year and if you go above 100 per cent then it acts as a brake on growth,” he said. “If all the capital we put into the banks was removed from our shoulders it would get our debt down to 80 per cent of GDP. Now it is unlikely someone would be that generous but somewhere between 80 and 100 per cent [is the aim]. I still regard 100 per cent as too high,” he said in an interview. Mr Noonan said he would meet Mario Draghi, ECB chief, within the next two weeks for talks on the issue. Ireland’s borrowing costs have dropped to pre-bailout levels since EU leaders agreed a deal at last month’s summit that could see the European Stability Mechanism, the eurozone’s €500bn bailout fund, take over a chunk of its bank-related debt on its balance sheet. Mr Noonan said Dublin deserved a deal on its bank debt because the ECB had blocked the previous government from burning senior bondholders in Irish banks for fear of contagion spreading across Europe during the early stages of the eurozone crisis.

“We are saying we took the hit for the team and if the rules are now changing then we needs to negotiate a deal with you,” said Mr Noonan. “Moral hazard should not just apply to those who borrow recklessly but also those who lend recklessly,” he said. Mr Noonan said he was confident that the EU summit deal, which was principally agreed to tackle Spain’s ongoing banking problems, would not unravel despite suggestions that some creditor countries may try to unpick the agreement. He said that he was confident the EU summit deal, which was principally agreed to tackle Spain’s ongoing banking problems, would not unravel despite suggestions that some northern eurozone countries may try to unpick the agreement. “There is a kind of unwritten protocol in Europe that member countries will be treated equally and if policy develops they’ll be compensatory developments to favour the country whose problem wasn’t addressed [previously],” said Mr Noonan. He said he was hopeful that a deal on Ireland’s debt could be agreed by October and that the ESM could invest in Irish banks as early as 2013.


Ireland passes bailout review

Ireland passed the latest review of its bailout program, and is now looking to secure a deal to refinance its huge banking debts to help it regain access to markets, Irish Finance Minister Michael Noonan said Thursday. Under the terms of the 2010 bailout, the European Union, International Monetary Fund and European Central Bank, regularly scrutinize Ireland for its adherence to a program of fiscal and banking targets. “All measures have been implemented and the program remains on track,” Mr. Noonan told a news briefing. However, “dealing with the burden of banking-related debt” is one of the significant challenges facing the country, he added. The government wants to fund itself totally from long-term debt again from 2014 when the €67.5 billion Ireland borrowed from the EU and the IMF will have expired.

But it says it first needs the euro zone to help it refinance a large part of the huge sums it pumped into banks that otherwise would have collapsed during the country’s deep debt crisis. Without a banking deal, Ireland’s sovereign debt could soon reach 120% of annual gross domestic product, a level of debt that will likely exclude the country accessing long-term bond markets any time soon. Since a euro-zone leaders’ summit on June 29, government ministers have hailed as “seismic” the decision to recapitalize Spanish and Irish lenders through the bloc’s rescue fund–the European Stability Mechanism. The Irish government wants to “retro-finance” as much as possible of the €64 billion pumped into Irish banks since the onset of the crisis in 2008. Mr. Noonan declined to reveal how much of the bank debt he hoped to have refinanced, but talks with the EU, IMF and ECB on securing a deal by October were ongoing. That deal, which could include relieving some Irish banks of loss-making home loans, will help Ireland re-engage permanently with debt markets.

“The real test of success is getting back to the markets,” he said. Ireland’s export-focused economy is being held back by the turmoil facing the wider euro zone, while austerity required by its bailout is depressing consumer demand at home. After growing by a revised 1.4% rate last year, the finance minister said he still expects Irish gross domestic product to grow 0.7% this year. However, despite progress, Ireland still faces significant challenges. Unemployment has soared “unacceptably” to 14.9% from about 4.5% before the crisis, with few funds to stimulate depressed consumer spending. “Objective one: balance the budget. Objective two: get the burden of the debt down,” Mr. Noonan said. Government data published Wednesday showed the Irish economy shrank 1.1% in the first quarter of 2012 from the fourth quarter, but an upward revision to figures for the final three months of 2011 means it avoided recession, commonly defined by economists as two consecutive quarters of contraction.


Number of suicides in Ireland rose 7% last year

The number of suicides registered in Ireland rose to 525 in 2011, an increase of 7 per cent on the previous year, according to data from the Central Statistics Office. A total of 439 men and 86 women were recorded as having taken their own lives, the majority of whom were aged 15-44. The figures are contained in the CSO Vital Statistics report for 2011 published yesterday, which collates the numbers of births, deaths and marriages registered in Ireland last year. President of the Irish Association of Suicidology (IAS) Dan Neville TD said the figures were “frightening but not surprising” given the impact the economy was having on mental health, especially among young men. “The recession has had a huge impact on people’s wellbeing. Those who lose their jobs experience a drastic reduction in their income or are in danger of losing their home experience a lot of anxiety, despair and depression. Relationship difficulties and marriage breakdown can follow on from that. We should be identifying and responding to these problems in the community as quickly as possible.” Mr Neville said the true figure for suicides would be closer to 600 when “undetermined” deaths were taken into account.

The IAS is calling for the urgent appointment of a director of mental health services and a new director of the National Suicide Prevention Office to ensure the €35 million allocated to mental health services is spent responsibly. Joan Freeman, chief executive and founder of Pieta House, which deals with suicide and self-harm, said the figures showed how big a problem suicide was in Ireland. “There is no doubt that the demand for our services have increased in the last year. We’re seeing a lot more children, those under 18 and also the 26-44 age group,” she said. The CSO figures also revealed that 74,650 births were registered in Ireland in 2011, a decrease of 326 on the previous year. The average age for women giving birth in Ireland is now 31.8 years, an increase of 0.3 years since 2010 and 1.4 years higher than in 2002.

Two in five births were to first-time mothers, whose average age was 29.8 years. Of the 25,190 women who gave birth for the first time outside marriage, the average age was 27 years. The highest percentage of births outside marriage was in Limerick city, at 49 per cent, while Galway county and Dún Laoghaire-Rathdown had the lowest at 25 per cent. A total of 1,720 teenagers had babies, 40 of whom were under 16. There were 28,995 deaths registered in 2011, 78 per cent of which were over 65. Circulatory disease was responsible for 33 per cent of deaths, followed by cancer at 30 per cent and lung disease at 12 per cent. There were 1,695 deaths due to accidents, suicides or other external causes, 73 per cent of which were among males. A total of 19,879 marriages were registered, and divorce was granted to 2,819 couples.

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