Ireland is on track to meet its commitments under the terms of the €85 billion rescue package agreed with the EU and the International Monetary Fund.
Outlining the results of a two-week review, Minister for Finance Michael Noonan said the IMF-European representatives were “happy” with the country’s progress.
He told a press conference in Dublin this morning the Government and the troika of international bodies funding the financial programme had also agreed a revised memorandum of understanding (MoU).
Under the new deal, the minimum wage is to be restored to €8.65 an hour from €7.65 as pledged by the Coalition in its programme for government. The measure was agreed in conjunction with a 50 per cent reduction in employer’s PRSI on the tranche of income up to the minimum wage, aimed at boosting the ailing jobs market.
At a separate press briefing in at the European Commission's offices in Dublin, the IMF’s European deputy director Ajai Chopra said the new Government had moved quickly, since taking office, in devising a banking strategy based on the recent stress tests.
Mr Noonan also announced that the second instalment of the National Asset Management Agency (Nama) for loans under €20 million would not now go ahead. “In terms of renegotiating the programme, we have done what we set out to do,” Mr Noonan told the briefing.
The Minister said the IMF was “very complimentary” on the decisive actions the Government has taken to finalise the bill for restructuring the bank system.
The revised document also specifically refers to targeting sheltered sectors of the economy – a reference to the pharmacy, legal and medical professions – to lower costs and make competitive gains.
It also refers to the review of Joint Labour Committee structures setting out pay rates, terms and conditions, for workers in other sheltered sectors of the economy.
Minister for Public Sector Reform Brendan Howlin said this review was not linked to the minimum wage. "Equally, we are looking at lawyers and the medical profession. There have been barriers in the past that have [resulted in] a loss of competition," he said.
Mr Noonan said the inclusion of the jobs condition had resulted in "a lot of new conditions" in the revised MoU. He would not be drawn on what those conditions were or the overall cost of the fund for the jobs initiative, other than to say it would be "fiscally neutral".
Representatives of the European Commission (EC), the IMF and European Central Bank (ECB) said the Government’s bailout was on track, but warned that challenges remained for the State and steadfast policy implementation will be necessary.
“The new Government, through its programme for government and its decisive approach to banking sector reforms, has taken full ownership of the goals and key elements of the EU-IMF-supported programme,” they said in a joint statement.
Mr Chopra said the programme was a lifeline for Ireland. “It represents an Irish solution to an Irish problem and it enjoys our support. In the root of the problem was a deep banking crisis and that’s where the emphasis of this programme is. The new Government is making good headway on this front.”
The revised memorandum agreed with the IMF, the EC and the ECB is to be formally signed off on by the middle of next month. “The negotiators have to revert back to their principals so the final signing off will be May 15-16th,” Mr Noonan said.
He said the IMF, Commission and ECB agreed that Ireland was fully in line with the bail-out programme at the end of the first quarter. “That is very satisfactory from our point of view,” he added.
Mr Noonan said the revised loan deal would take account of the jobs plan, a public sector spending review due in September and the massive bank restructuring plan to create two “pillar” banks announced at the end of last month.
