Noonan reiterates concerns over debt

MINISTER FOR Finance Michael Noonan repeated his warning that Ireland’s debt could become unsustainable.

He said the level of capitalisation required for the banks would be known at the end of the month.

“However, there are other variables including, obviously, the level of growth one builds into the economic model and the actual level of growth achieved.

“Therefore, no matter how wise one is, it is not possible to say the debt will be unsustainable next week, next month, next year, or in three years’ time.”

Mr Noonan, who was taking his first question time as Minister for Finance, said the total burden on Ireland at present would lead one to believe there could come a time when it would be unsustainable and all options must be considered to guard against that possibility.

Richard Boyd Barrett (ULA) said Ireland was failing to look reality in the face on the issue.

“It is shocking that some 18 per cent of tax revenue in 2014 will go to service only the interest repayments on this debt, never mind the capital,” he added.

Mr Boyd Barrett recalled Mr Noonan saying last February that it was neither morally right nor economically sustainable for taxpayers to be asked to beggar themselves to make massive profits for speculators.

“Is it not time to consider the Iceland option of defaulting, or, at least, giving the people the opportunity to debate issues concerning the possibility of defaulting so that instead of bailing out banks we might put the National Pension Reserve Fund into a job stimulus programme?” Mr Boyd Barrett asked.

Sinn Féin finance spokesman Pearse Doherty asked what projections had been made in the Department of Finance which led the programme for government to state a time would come when debt unsustainability might become a factor.

“Is the additional amount to be put into the banks €10 million,” he asked. “Is it €2 billion or €100 billion? I ask the Minister to tell us the honest-to-God facts, the truth.”

Mr Noonan said people whose opinion he respected told him the figure would be more than €10 billion but he could not be more precise.

Ireland, he said, must move in the context of a bailout agreement being in place with the agreement of the IMF, the European Central Bank, the European Commission and the Government.

The contract, said Mr Noonan, was not with the previous Fianna Fáil-Green Party government but with the Irish Republic and “one must remember that when considering those issues”.

The Minister told Fianna Fáil finance spokesman Brian Lenihan that it was not possible at this stage to provide definitive estimates on the level of savings from reducing the pricing of the EU loans to Ireland.

However, he understood from preliminary analysis by the NTMA that a 1 per cent reduction could yield overall savings of the order of €725 million over the lifetime of the €12.6 billion loans which had been committed so far.

The estimated equivalent annual savings would be of the order of €130 million, he added.