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Ireland to become first country to exit eurozone bailout Ireland becomes the first country to exit eurozone bailout programme
(about 4 hours later)
Ireland will become the first eurozone country to exit a stringent bailout programme this weekend, as the €85bn (£72bn) loan facility orchestrated by the International Monetary Fund, the European commission and the European Central Bank formally expires. Ireland became the first eurozone country this weekend to exit the international bailout programme that rescued it from national bankruptcy, a crisis which the country's finance minister said was the worst period since the famine.
As Irish government ministers prepared to mark the bailout exit on Friday morning, the vice-president of the European Union said it was a mistake that the state gave a blanket guarantee to the country's debt-ridden banks – precipitating a rescue call to the troika that rescued Ireland from collapse. Relief over exiting the bailout was tempered with warnings from its ministers that the policy of austerity must continue to drive down the Republic's massive debt.
Olli Rehn told Irish television that he had been shocked by the level of banking debt that almost dragged the country over the financial precipice before its bailout was secured in November 2010. Cabinet ministers lined up on Friday morning to praise the heroism of the Irish people for stoically accepting three years of slashing social welfare, state jobs and public sector wages.
Although the guarantee to shore up the banks that lent billions to property speculators was "water under the bridge", Rehn said it had been wrong to give them so much money. The Republic's price for receiving €67bn from the International Monetary Fund and the EU was a programme of 270 separate cuts to budgets in unemployment benefits, health, education and other spending areas.
The Fine Gael-Labour government will talk up the departure from the bailout programme as evidence that its austerity programme has been successful in restoring international confidence in Ireland. Marking the end of the IMF-EU bailout programme, Irish finance minister Michael Noonan said: "This isn't the end of the road. This is a very significant milestone on the road."
But Sinn Féin's finance spokesman, Pearse Doherty, said that while the troika of IMF, EU and ECB officials were leaving Dublin, "the troika mindset remains firm in Government Buildings". In a reference to the borrowing boom fuelled by cheap credit during the Celtic Tiger years, Noonan said: "We can't go mad again."
Doherty predicted that there would be further austerity cuts long after the bailout programme was over and the troika had gone. The finance minister compared the crisis that pushed Ireland to the edge of financial disaster as the worst since the famine of the mid-19th century in which millions died or emigrated in the potato blight.
"They bailed out the banks and unfortunately over the three years it was the Irish people that suffered," he said. Asked how the exit from the bailout would impact on domestic demand – one of the weakest sectors in the Irish economy – Noonan's ministerial colleague Brendan Howlin interjected at the press conference in Government Buildings: "Try booking a restaurant in Dublin tonight."
The general mood in Dublin remains one of resignation after three years of cuts in social welfare and state programmes with no visible euphoria on the streets. Noonan added: "Demand is beginning to move and I think that is getting confidence back because there is a lot of money around as savings are very high at the moment."
Michael McMorrow, a self-employed Dubliner, said: "It does appear that there are small signs of improvement – unemployment going down a little, property market starting to move a little, dormant shop units waking up a little, the tide of new charity shops in Dún Laoghaire slowing down a little. The minister who has had to deal most with the IMF-EU officials, the so-called troika of economic experts oversaw the Irish economy and government programmes over the last four years, said they sometimes failed to appreciate the political pressures the Irish coalition was under.
"But, scratch the surface and we're petrified that at any moment it'll all come crashing down again with the next instalment of financial or banking chaos. It still feels that we've no control and that we're just biding our time until the forces that have savaged our savings, our salaries and our security fly out of control again." "Most of the people who were involved in the background of the troika were very smart, very competent technocratic people but they weren't very good at politics," Noonan said.
He added: "I'd love to believe that leaving the bailout is genuinely a step into the light, and maybe it is, but I'm too scarred to raise my hopes just yet." On Europe's prospects as a whole, Noonan said: "The phase of additional European countries going into [bailout] programmes, and the countries in programmes having concerns over their situation, is over. The eurozone is quite strong again."
Enda Kenny, the country's prime minister, will make a live televised address to the public on Sunday night after a weekend of frenetic government activity as the coalition tries to highlight the importance of the bailout exit. Noonan also repeated a constant refrain from Fine Gael and Labour ministers in paying homage to the Irish people for burdening the cuts imposed by the troika.
Exporting a way out of the crisis "The real heroes and heroines are the Irish people," he said.
Richard Bruton, the Irish employment minister, is emphasizing Ireland's strength in the hi-tech and food sector as evidence of the Republic exporting its way out of the crisis. Earlier the employment minister Richard Bruton said the Irish failed to riot or violently protest the way the Greeks had done because of the "patriotism in the way people approached this crisis".
In an address inside Government Buildings, Bruton said the government has created €2.5bn in loans for new businesses to fill the void created by Irish banks reluctant to lend to SMEs and entrepreneurs. Sinn Fein, however, predicted that the spirit of the IMF-EU programme would live on in terms of ongoing austerity cuts.
Bruton described enterprises and workers as the "true heroes" who battled their way through the economic crisis. Party finance spokesman Pearse Doherty said: "the troika mindset remains firm in government buildings".
He said that the fact Intel's new chip was manufactured in Ireland was a "mark of the journey" Ireland had been on over the past three years. Among the ordinary citizens portrayed on Friday as the true heroes of the last three years there was a mixture of resignation and wariness over what the exit would mean for them.
The minister said that over the past 12 months there had been a 4% increase in private sector employment but acknowledged that unemployment was still high at 12.5% of the overall workforce. Michael McMorrow, a self-employed Dubliner, said: "It does appear that there are small signs of improvement – unemployment going down a little, property market starting to move a little, dormant shop units waking up a little, the tide of new charity shops in Dun Laoghaire (south country Dublin) slowing down a little.
On the taxpayer-rescued Irish banks, Bruton accepted that the banking sector was "not lending to the levels that we would like". "I'd love to believe that 'Leaving the Bailout' is genuinely a step into the light, and maybe it is, but I'm too scarred to raise my hopes just yet."
He said bank refusal rates on loans to businesses were still high compared with other parts of Europe. Bruton, however, stressed that refusal rates over the last two and a half years had fallen from 30% to 20%. But Martin Shannon, a 31-year-old bookseller from south Dublin, said he has already noticed an upturn in consumer demand even before the country left the bailout.
The banks are some of the biggest hate figures among the general population after tens of billions of euros were pumped into a sector that got into lethal debt levels because they were lending vast sums to builders and property speculators. "We'll be in control of our finances more than we have been for the last few years, but I'm indifferent as to whether that's actually a good thing. Wasn't it ourselves who dug the hole in the first place? Or at least allowed the hole to be dug on our land.
"Working in a bookshop, I'm used to having a grim outlook. Paying tax, and with more taxes and charges looming in the new year, it's hard to get excited about this. However, there is one thing that gives me a bit of hope, and indicates to me that things might be getting better. I've noticed that our turnover in the bookshop is up around 10% on this time last year. Customers seem more relaxed and are spending a little more easily, pointedly mentioning the price of books a little less frequently," Shannon said.
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