Fianna Fáil Spokesperson on Public Expenditure and Financial Sector Reform Michael McGrath TD has said the draft updated Memorandum of Understanding between the Government and the EU / IMF confirms that the new Government has failed, despite repeated election promises, to secure any significant renegotiation of the deal reached last November.

 “Last year, Michael Noonan referred to the deal as ‘an obscenity’ and ‘a disaster’. Eamon Gilmore said it was ‘Labour’s way or Frankfurt’s way. It is clear now that these comments were nothing more than election hot air and have come to nothing.

“The Irish people were promised wholesale renegotiation of the deal. What they got was a copy and paste of last November’s deal with some ‘strictly fiscally neutral’ tweaking.”

Deputy McGrath highlighted some elements of the document published last night:

 

•             The document refers to the sale of state assets to help reduce our Government debt (page 16). There is no mention of using the proceeds to invest in further job creation initiatives despite the Government saying this would be permitted by the troika.

 

•             Next week’s jobs initiative will have to be fiscally neutral up to 2014. We know the cost of the PRSI and VAT reductions alone to the end of 2013 amount to €1.3 billion. How will this be funded?

 

•             With the downward revision of growth forecasts, the Government is likely to introduce austerity measures beyond what was originally agreed if it is to reach the 3% deficit target by 2015. The Programme already provides for an adjustment of at least €3.6 billion in 2012 and at least €3.1 billion in 2013. ‘….the scale of the necessary consolidation in Budgets 2013-2015 will have to be reviewed in the context of the likely growth prospects nearer the time…’ (Page 14).

 

•             Separately, in a parliamentary reply, the Minister for Finance has thrown in the towel on even attempting to impose losses on senior bondholders in Anglo Irish Bank and Irish Nationwide unless additional capital is required. The Government had already conceded this would not happen with AIB, BOI, EBS and IL&P. This is despite Fine Gael’s pledge that the banks would not get another cent without burden sharing among all classes of bondholders.