Noonan: Troika approves multi-billion Irish stimulus package
Ireland’s troika of bailout partners has approved a muilti-billion euro stimulus package that will be unveiled later this month, Minister for Finance Michael Noonan has said.
The stimulus measures are designed to kick start the economy and curb unemployment, he told the Financial Times in an interview. The European Central Bank, the European Commission and the International Monetary Fund approved the measures as long as the government does not breach spending limits, the Minister was reported to have said.
“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,” the told the newspaper.
The package will be spread across four or five years and will be funded without increasing the national debt, mainly through the European Investment Bank, the National Pension Reserve Fund and through the sale of state assets, he was reported as saying. The National Asset Management Agency is also to invest €2 billion in refurbishing property, he said.
“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.
Speaking of his bid to win a deal from Europe on Ireland’s bank debts, Noonan said that the country’s debt will peak at about 117 to 120 per cent of GDP next year.
“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,” the Financial Times reported him as saying.
Noonan told the newspaper that one of the options under consideration is for the ESM to take stakes in the main Irish banks.
“We are saying we took the hit for the team and if the rules are now changing, then we need to negotiate a deal with you,” he said. “Moral hazard should not just apply to those who borrow recklessly but also those who lend recklessly.”
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