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Irish report Irish report
by Euro Reporter
2012-10-13 11:52:13
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Irish bank debt deal could help credit rating

Moody’s Investors Services would consider removing the threat of a downgrade to Ireland’s credit rating if the euro zone agreed to ease the debt burden the government incurred while rescuing its stricken banks, one of its senior analysts said Thursday. But in an interview with The Wall Street Journal, Dietmar Hornung, a senior credit officer at Moody’s, said the country’s weak economic outlook remains of major concern. The Irish government hopes that the euro zone will refinance on easier terms a large part of the €64 billion costs ($82.4 billion) the country borrowed over the past four years to save its banking system from collapse. Government ministers say a deal would help Ireland’s efforts to finance itself entirely in the bond markets from 2014, after the last of its bailout loans are disbursed by the European Union and the International Monetary Fund in late 2013.

Doubts have surfaced about the timing and scale of any deal that Ireland could hope to secure from its bailout lenders, in particular whether the European Stability Mechanism, the euro area’s new rescue fund, could directly finance Irish banks, thereby cutting the government’s debt stock. Irish Finance Minister Michael Noonan insisted Wednesday that talks continue, but refused to say when he hoped any banking deal would be completed. “A resolution of the bank debt would be the important factor in deciding the credit rating,” Mr. Hornung said. “If that would be resolved it would be credit positive, but would not in itself automatically lead to an upgrade.” Mr. Hornung’s comments offer hope that Moody’s would revise its current negative outlook on Ireland if it secured a deal on bank-related debt, a move that would in turn boost Ireland’s efforts to secure long-term financing at sustainable interest rates. In July 2011, Moody’s downgraded Irish government debt to non-investment or junk grade, and has maintained a negative rating outlook ever since. A negative outlook signals that the firm views it as more likely that its next move will be a downgrade than an upgrade.

However, Mr. Hornung stressed that in setting “the framework” for any future rating decision, Moody’s worries that Ireland’s economic recovery could be derailed if demand for its exports from the euro area and the rest of the world weakens further. “There are many different elements which we are monitoring, including the economic outlook, the fiscal outlook, a possible resolution of some issues in the banking sector, and regaining market access on a sustained basis,” he said. “It is not one dimensional.” After growing 1.4% last year, Moody’s forecasts Irish gross domestic product will increase by only 0.2% this year, as demand for its exports is curtailed amid the wider euro-zone crisis. It projects “some kind of recovery” of 1.5% growth in 2013, despite a continuation of weak domestic demand. “I want to stress the risks to the downside [of these forecasts], looking at the outlook for Ireland’s main trading partners,” he said. “In terms of economic outlook, we still see very modest growth in Ireland,” Mr. Hornung said. “Domestic demand remains subdued. There’s uncertainty about the external environment in terms of the euro area as well as the global context that remains of concern to us. On the other hand, we are monitoring that Ireland is taking steps to re-access the market on a sustained basis and that is a credit positive element. But in our view a negative outlook is warranted.” Mr. Hornung said that despite Irish government optimism about its ability to borrow in the bond markets following its return in July, the euro zone crisis is still a major source of risk. “In the European context, we still see uncertainties in dealing with the debt crisis,” he said.


Thanks be to cheeses ban is lifted

There was grate news for Ireland’s cheesemakers who got their whey this morning when the Broadcasting Authority of Ireland (BAI) confirmed that when it comes to advertising cheeses on television, it has decided to let it brie. Last March, the State’s broadcasting watchdog published a draft advertising code that proposed banning cheese advertising from children’s television because of its high fat content. “You gouda be kidding,” was the response from the general public and the dairy farming lobby who feared the ban might be a feta accompli. The howls of outrage appear to have been heeded by the authority, however, which this morning published its revised code and exempted all cheese from the ban. The authority said it had followed the Department of Health’s recommendation and exempted cheese from a new advertising system that is to come into effect in the middle of next year.

Under the new code, all commercial communications for food and drink that are deemed to be high in fat, sugar and salt will not be permitted in children’s programmes. Restrictions to such foods will also apply to commercial adverts that are broadcast outside of children’s programmes but are directed at children. Ads will not be able to include celebrities or sports stars or cartoon characters. Although cheese ads will be broadcast, they will have to include an on-screen message indicating the recommended maximum daily consumption limit. BAI chief executive Michael O’Keeffe said cheese had been taken out of the nutrient profiling model because of “the health benefits and the economic and cultural significance of cheese in an Irish context”.

The big cheese at the Department of Communications, Pat Rabbitte, welcomed the decision. “This is a commonsense decision from the BAI and demonstrates that the consultation process has worked well,” the Minister said. Food and Drink Industry Ireland (FDII), the Ibec group that represents the food sector, also welcomed the lifting of the ban, but said the newly published advertising code was based on flawed science and would have little impact on childhood obesity rates. "The nutrition model in the code is simply copy and pasted from the UK, without any reference to valuable Irish research on the subject,” head of consumer foods Shane Dempsey said. "The UK system is unscientific, out-of-date and based on the concept of a 100g measure rather than on the actual amount people eat. This means that foods such as dairy and cereal products, which are vitally important to Irish children's diets, are classified as unhealthy."


Charities air concerns to Burton

A pre-budget forum hosted by Joan Burton today heard calls for child benefit and the older person's free travel scheme to be spared cuts. The event, which was attended by more than 30 charities and NGOs, also saw people urge the cancellation of the plan to move single parents from the lone parent's allowance to job seekers’ allowance once their youngest child reaches seven. The forum is an annual event giving groups working with some of the vulnerable sectors an opportunity to spell out their concerns directly to the Minister for Social Protection in the run-up to the budget. Among the 31 groups at the event were the Irish Senior Citizens' Parliament, Social Justice Ireland, the Society of St Vincent de Paul, housing charity Threshold, the single parent organisation Open, Inclusion Ireland and Care Alliance Ireland.

One of the first submissions was from a woman who gave only her first name, Sarah, a single mother and also a member of Open. She said worked 22 hours a week, her income supplemented by a reduced lone-parent allowance. She was “shocked” at plans announced last year to move mothers like her from the lone-parent's allowance onto job seekers, once their youngest child reaches seven. If the plan came in she would lose her lone parent family payment by 2015 and would have to get a full-time job “which in this climate is very hard”. Her daughter would have to be home alone from 2.30pm daily until she finished work she said. “I can’t afford the after-school that is available as it would take up all my wages, and so I would have to give up my job and go on the live register. That is something I do not want to do. “All in all it felt like last year’s budget totally singled out families like mine. I want to work and get off welfare. As you know Minister the payment was designed the way it is to recognise that we don’t have proper childcare here. We still don’t. Why is it being changed then?” the woman asked.

Her submission was referred to several times by other groups as underlining the need to not implement the plan. Maireád Hayes, chief executive of the Irish Senior Citizens' Parliament, noting the presence of officials from the Department of Public Expenditure and Reform at the event, said there were “plenty of fat cats out there for the taking”. She urged them to seek higher taxes for people on over €100,000 per annum rather than seeking deep cuts from the Department of Social Protection budget. Ms Hayes also referred to fuel poverty among older people as did Michael O’Halloran of the Retired Workers’ Committee of Ictu. He also said if the free travel scheme for older people was withdrawn “CIÉ would collapse in the morning.”

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Emanuel Paparella2012-10-13 15:13:56
Here we have another case of a misguided sense of charity and solidarity. Charity is at best a last minute short time solution; an emergency usually tingeg by paternalism and condescension and offending the human dignity of the recepient. Justice on the other hand solves the problem of chronic indigence. All those politicians and so called "Christians" who would place charity above justice are misguided when it comes to solving socio-economic problems. Charity is no substitute for justice, especially distributive justice.

Leah Sellers2012-10-14 04:42:10
Ah yes, Dear Brother Emanuel,
But their are many kinds of Justice - even Charitable and Equally Applied Justice, Equal Opportunites for All, and Equal Liberties for All.
Now, those ingredients will create a more complete and mighty fine Socio-Economic "Birth"-Day Cake. Yummy, Yum, Yum !

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