Ireland’s Finance Minister on crisis

DUBLIN (BestGrowthStock) – Euro zone ministers have agreed to send a joint European-IMF mission to Ireland that could prepare the way for a bailout to prevent its debt crisis destabilizing the euro zone.

Following are key quotes from an interview with Ireland’s Finance Minister Brian Lenihan on state broadcaster RTE on Wednesday:

BANKS TO BE WEANED OFF ECB SUPPORT?

“The question of weaning the banks off European Central Bank support is only one of a number of issues that have to be tackled here. As you know, Europe asked us to extend the guarantee recently, we’ve done that. We’ve done everything, we’ve complied with the EU requirements, we’re part of a common currency here. We defend that currency. Ireland has been the point of attack on that currency in recent weeks, and it’s important that we build up our defense and ensure that the currency itself is protected, and for that reason, the Irish government will fully engage with this process and work with the mission to ensure that everything possible is done to secure the Irish banking system.

DEPOSITS

In the interim period, the European Central Bank supports the banks system fully and there is no need to have any concerns about the safety of deposits or anything of that type in the banking system.

We’ve part of one of the strongest currencies in the world, we work as part of that currency zone with the other finance ministers in it, with the other central banks in it, to ensure that the eurozone remains in tact as a strong currency area and that’s what we’re about.

WHAT ABOUT AID PACKAGE?

There no question of loading onto the Irish sovereign and the Irish state some kind of unspecified burden. That’s why the government took great care not to make a formal application at this stage but to engage in intensive discussions to see exactly what the options are … and should be taken at this stage.

EU STRESS TESTS

Remember that EU stress testing already took place on the Irish banks … Again a second look will have to be had at that.

WHEN ARE YOU GOING TO PUBLISH THE FOUR-YEAR PLAN?

The government is considering the four-year plan this week. The consideration of the plan by the government will continue in the next two days. The budget will be on the scheduleD date, on the seventh of December.

November is the most important month in terms of gathering tax receipts. We need a precise assessment of what the tax receipts are in order to announce the budget. Seventh of December is the correct date for the announcement of the budget.

POLITICAL CONSENSUS ON BUDGET?

But of course the political system could generate confidence in Ireland by agreeing with Europe that we should frontload six billion correction this year, that will be an enormous confidence building measure in Ireland. I’m confident the budget will be passed.

EUROPEAN CENTRAL BANK

The European Central Bank stands fully behind the Irish banking system and there are no funding difficulties in the Irish banking system.

The European Central Bank has stood fully behind the system, what is important is that we look at the structural problems that are in the system and address them. That’s what this mission is about.

FISCAL POLICY

There was no question raised about our budgetary measures. The finance ministers in Europe welcome the announcement by the Irish government that the four-year budgetary strategy will involve a six billion correction this year. So, whatever correction the government does this year will be fully welcomed in Europe.

Our budgetary policy has full confidence among European partners. But in relation to banking, steps taken to date require further support.

FOUR-YEAR FISCAL PLAN

You’d appreciate that this is the plan for four years. It requires great care.

IS CORPORATION TAX RATE SAFE?

Of course our corporate tax rate is safe because that’s the matter which is safeguarded by the (Lisbon) Treaty.

Exports have grown six percent this year. Ireland is moving into a balance of payments surplus next year… there are economic positives but many of them are elusive

WHAT SORT OF AID WILL IRISH BANKS REQUIRE?

We haven’t taken on any additional debt. We will assess with European partners what is required. What may be required may not in fact be an actual transfer of money now but demonstration of how much money can be made available if further difficulties materialize.

Certainty will be brought to this. You’d appreciate when you are looking at structural problems in banks you must take great care in how you proceed to address them. We’ve already stress-tested the banks, we’ve already removed many of the toxic assets from them… We will come to a very rapid conclusion on this matter.”

IMF INVOLVEMENT

Europe is determined to address this problem with Ireland. There is determination by the government to engage in this short, focused consultation with the Commission, with the ECB and with IMF. They (IMF) are involved because they’re far more experienced than the ECB or the Commission in dealing with banks which have come to difficulties in other countries. Their technical expertise has been relied upon as well.

WHAT ABOUT LOSS OF SOVEREIGNTY?

We share our sovereignty with Europe in relation to currency. We don’t have our own currency. You have to act with your partners in whatever steps you take. It’s not the question of wanting or not wanting. It’s the question of identifying the problem in an urgent way and dealing with it.

EURO ZONE ACTION

First of all, we’re part of a common currency here, we’re not on our own, we’re part of the euro zone and the Finance Ministers of the euro zone are determined to take whatever action is needed, to safeguard financial stability throughout the euro area, that includes Ireland.

The statement made it very clear last night, that the measures taken, to deal with the issues in the banking sector, particularly the guarantees, were welcomed by them and received as appropriate by them, and I think that is important.

What’s here now, is a common determination that we work on these difficulties … that work is well underway.”

POSSIBILITY OF UK ASSISTANCE? If Britain wishes to participate, that’s a matter for Britain in the event that a package is needed. That’s a matter in the first instance for the United Kingdom. I know they see Ireland as one of their best customers and the United Kingdom is anxious to help in every possible way but I don’t want to pre-empt their right to make their own decision in a matter of this type.

In general, the UK has not participated in European Union wide assistance, but I know that the British authorities are anxious to ensure that any help that Ireland needs will be given, so again it’s a matter for the United Kingdom authorities, it’s not a matter for the Irish matters.

But let’s be clear, Britain is not in the eurozone , it’s in the sterling area, but the eurozone is determined to protect its own financial system and that’s very important.

WHEN WILL TALKS WITH JOINT IMF-EUROPEAN MISSION BEGIN?

The discussions will begin on Thursday.

(Reporting by Dublin bureau)

Ireland’s Finance Minister on crisis