Government says we will exit EU-IMF programme without precautionary credit line

Statement by the Taoiseach, to Dáil Éireann, Thursday November 14

Ceann Comhairle,

I wish, as a matter of courtesy, to inform Dáil Éireann of the outcome of a government meeting this morning.

The government has decided that Ireland will exit the EU-IMF assistance programme on December 15, without the need to pre-arrange a new precautionary credit line from our EU and IMF partners.

This is the right decision for Ireland, and now is the right time to take this decision.

This is the latest in a series of steps to return Ireland to normal economic, budgetary and funding conditions. Like most other sovereign eurozone countries, from 2014 we will be in a position to fund ourselves normally on the markets.

Minister Noonan is travelling to Brussels to convey this decision to our partners at a Eurogroup meeting this afternoon.

In preparing for this decision, both the Minister for Finance and I have engaged intensively with international institutions and our European and international partners on Ireland’s exit strategy, and all have indicated to us that we will continue to receive their strong support whatever our decision.

In that context, I have spoken on a number of occasions with Chancellor Merkel. She confirmed that this was a decision for Ireland to make, and whatever the decision that we made, the Chancellor was open to finding ways for Ireland and Germany to work more closely together to find ways to reinforce Ireland’s economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs.

The German government has asked KFW, the German development bank, to work with the German and Irish authorities swiftly, in order to deliver on this initiative at the earliest possible date.

We will exit the bail-out in a strong position.

This government has been preparing for a return to normal market funding in 2014 for three years and the NTMA has built up a cash reserve of more than €20 billion.

Growth has returned as our economy regains its competitiveness. Exports have grown to all-time highs, and our balance of payments is in a strong surplus.

We are creating 3,000 jobs a month, and the Live Register has fallen for 16 consecutive months to below 400,000 for the first time in four years.

Our budget strategy is on track, and the government deficit is now falling rapidly. Public debt will start to fall next year relative to the size of the economy.

As with all euro zone countries that have ratified the Fiscal Stability Treaty and that are pursuing responsible economic policies, Ireland is eligible for access to the €500 billion funding backstop provided by the European Stability Mechanism.

The very existence of this backstop for all euro zone countries has contributed significantly to improved investor confidence in Ireland and the euro zone as a whole.

Confidence in Ireland has improved considerably in recent months and interest rates on Irish government bonds are at now highly affordable levels.

We still have a long way to travel, but clearly are now moving in the right direction.

Neither today’s decision, nor the exit from the bail-out in December, means the end of difficult economic decisions. There are still demanding times ahead.

It does not mean any windfall of cash. It won’t mean that our economic and financial challenges are over.

Alongside the bail-out exit in December, we will publish a new Medium Term Economic Strategy to set out a new sustainable economic pathway back to prosperity for the country.

This will include a recommitment to bringing government borrowing down to sustainable levels during the remainder of this government’s term of office.

It will be an economic plan based on enterprise, not speculation.

Never again will our country’s fortunes be sacrificed to speculation, greed and short-term gain.

And despite the economic challenges that people will continue to face in their daily lives, we will set out a path to a brighter economic future for our people, a path from mass unemployment to full employment; from involuntary emigration to the return of so many thousands of our people who have had to leave to find work

Nobody should doubt our commitment to finish the job we started when we took office. Today is just the latest step on that ongoing journey: a significant step, for sure, but also, just another step towards our ultimate objective of getting Ireland working again.