Tuesday, February 28, 2012

No more money?

There are bound to be lots of issues raised over the course of the referendum campaign announced today.  Some will undoubtedly have nothing to do with the 11-page treaty but of those which will relate to the treaty will be Ireland’s access to support funds after 2013. 

Under the current programme the plan is that Ireland will be fully-funded in bond markets from by end of 2013.  Given the scale of the funding required in 2014 and 2015 this is still far from certain. 

The second-last provision of the preamble of the treaty (on page four) says:
STRESSING the importance of the Treaty establishing the European Stability Mechanism as an element of a global strategy to strengthen the Economic and Monetary Union and POINTING OUT that the granting of assistance in the framework of new programmes under the European Stability Mechanism will be conditional, as of 1 March 2013, on the ratification of this Treaty by the Contracting Party concerned and, as soon as the transposition period mentioned in Article 3(2) has expired, on compliance with the requirements of this Article,
This clearly states that no funding will be available to new programmes under the ESM unless the treaty is passed.  However on the 21st of July last, the statement issued by EU leaders at that summit in point 10 said that:
We are determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes. We welcome Ireland and Portugal's resolve to strictly implement their programmes and reiterate our strong commitment to the success of these programmes.
This clearly states that funding will be provided under the existing programme (not a new programme) until that country has regained market access.

If we exit the current programme it is obvious that entry into a new programme funded by the ESM would require ratification of the treaty first.  That is a longer-term issue.  Of more immediate concern is which provision takes precedence for Ireland as long as we remain in the current programme? 


  1. Thats a very intresting point Seamus and I dont think anyone else has raised it. We dont need to access ESM if EU leaders keep their promise. i am surprised the 'no' camp didnt latch on to this yet.
    Are you going to analyse the excecquer returns for the first 2 months? Or are there too many one off's to give a good analysis?

    1. Hi eamonn,

      It seems fairly clear cut to me that the proviso for the ESM applies to NEW programmes. If we left the current programme we couldn't enter a subsequent programme under the ESM but there is no reason why the current funding arrangement cannot be extended in 2014 and beyond.

      Also depending on our funding needs we may be able to draw down sufficient amounts from the IMF, or perhaps arrange further bilateral loans with the UK, to keep us afloat.

      The ESM would serve usefully in the "lender of last resort" function but there would be other last resorts available if they were needed.

      As for the Exchequer Returns. I think you hit the nail on the head. They are a mess and any meaningful year-on-year analysis would be difficult. I intend to have a look after the first quarter but drawing firm conclusions will not be straightforward.