Minister for Public Expenditure Brendan Howlin has raised the prospect of a deal this weekend for the early repayment of International Monetary Fund (IMF) rescue loans, a development that could ease preparations for the budget next month.
Mr Howlin’s intervention in Paris yesterday came as Minister for Finance Michael Noonan said he would be increasing his official forecast for economic growth this year and next. This too improves the budgetary arithmetic as tax revenues rise when growth accelerates.
Mr Noonan is in Milan today for informal talks with euro zone and EU finance ministers. Their approval is required to repay the IMF early as the 2010 bailout pact compels Ireland to repay the IMF and European lenders at the same time.
Although potential resistance in Berlin was perceived as the main hurdle, Mr Howlin suggested German finance minister Wolfgang Schäuble has agreed in principle to back the deal. So too had European Central Bank chief Mario Draghi and Jeroen Dijsselbloem, leader of the euro finance ministers.
‘Nobody is against’
Mr Howlin suggested political agreement could be reached in Milan: “All those we have talked to – Draghi, Dijsselbloem, Schäuble and others – are on board. The Finnish parliament has endorsed it. The German parliament has set a date to ratify it. Nobody is against.”
The Government aims to make use of Ireland’s low borrowing costs in private markets to draw down new loans to pay off expensive IMF debt. This could yield annual savings of some €375 million.
Ahead of Fine Gael’s “think-in” in Co Cork, Mr Noonan said the Department of Finance would raise its growth forecast to a little more than 3 per cent of economic output this year from the 2.1 per cent projection set out in April.
The new forecast improves the outlook for the public finances as Government figures work on the basis that a 1 percentage point expansion in gross domestic product delivers some €1.6 billion in additional tax revenue.
“The Department of Finance official figure for 2014 is we’re going to grow just ahead of 3 per cent and next year we’ll be around 3 per cent as well,” Mr Noonan said. “ . . . I can see a number of things that could see growth slip back but if it’s managed prudently you could run that for a decade and solve the problems that Ireland has.”
