Bailout Exit Welcome, but Major Economic Challenges Remain – FF

Fianna Fáil Finance Spokesperson Michael McGrath has welcomed the formal end of the Programme of Assistance with the Troika but has warned that major economic challenges remain to be overcome if a sustainable recovery is to take root. Deputy McGrath also paid tribute to the efforts of the people and communities across Ireland who have borne the brunt of the fiscal adjustment since 2008.

Deputy McGrath commented, “The fiscal targets under the EU / IMF programme have been met, enabling the country to exit the Programme on schedule. This has involved very painful cuts and tax increases. The credit for achieving the deficit reduction goes principally to the Irish people who have shown incredible resilience. As the Programme ends, we should acknowledge the sacrifices and hardships that very many people have experienced to move the public finances onto a more sustainable footing.  While continuing the fiscal consolidation of the previous government, the FG / Labour coalition has introduced three Budgets which have been independently found by the ESRI to have been regressive in nature – with the greatest burden being placed on those least able to carry it.

“Many thousands of families are still struggling to make ends meet, the health service is in crisis and significant threats to Irish and European recovery remain. A number of key issues have not been adequately addressed over the last 3 years.  Genuine sustainable solutions have not been put in place in respect of mortgage arrears. Banks are not lending to businesses in respect of viable projects. Support for unemployed persons is still patchy and measures to tackle poverty traps have not been delivered. In view of the significant risks our country faces – both internal and external – we believe it would have been wiser to negotiate a precautionary credit line now from a position of strength.

“Sheltered sectors of the economy, including legal and professional services remain unreformed.  There has been a failure to implement improve financial management structures in the health sector, the cost of generic drugs remains excessive and no action has been taken in relation to the cost of GP visits.

“While there are some welcome signs of economic recovery, we still face very significant risks and there is absolutely no room for complacency. The truth is that we need to achieve a reasonable level of economic growth of at least 2-3% per annum over the next number of years to ensure our debt sustainability and to be able to reduce the deficit without further severe budgets.

“Post-bailout Ireland will still be subject to very onerous external surveillance by the EU, ECB and IMF and we are committed to complying with a raft of EU deficit and debt rules. The reality is that international markets, on whom we will now be relying on for funding, will not demand any less fiscal discipline than the troika has for the past three years. So the exit is good news, it is important for international sentiment towards Ireland but the road to recovery is still going to take time and is fraught with risk. A breakthrough on retroactive recapitalisation of the banks is vital and would greatly enhance our debt sustainability.

“For citizens, the test of economic progress is whether they see any improvement in their standard of living and for too many people this is not happening.  In fact, the choices that this Government have made to date have unfairly targeted the most vulnerable in society.”