THE CABINET last night signed off on the draft of a revised memorandum of understanding with the EU and International Monetary Fund that includes the Coalition’s jobs initiative and its commitment to reverse the €1 cut in the national minimum wage.
Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin briefed their colleagues on the document after Government negotiators and the missions from the EU-IMF agreed on a final draft yesterday.
In advance of last night’s meeting, Mr Noonan said the Government had met all the targets required to be met by the first quarter and could therefore draw down the portion of the €67 billion rescue fund that was due. He accepted that exchequer revenue was slightly down but said it was balanced by spending being a little below profile.
Mr Noonan was one of several Ministers who warned about possible problems that might arise later in the year if one of the key conditions in the memorandum referring to savings achieved by the Croke Park agreement was not met.
The condition in the document is that further decreases in public sector pay must be sought if the projected savings arising from efficiencies and the reduction in overall public service numbers are not achieved by the end of September.
Mr Noonan said he was reflecting a “fear we all share” [in Government] that the Croke Park agreement on public service efficiencies would not deliver as expected.
He said the cost of running Government had to be cut by 9 per cent and that a reduction of 25,000 public service employees was required.
“We want to get the reductions through savings in the public service. We want to leave pay alone,” he said.
The Minister of State with responsibility for Public Sector Reform Brian Hayes said yesterday a reduction in staff numbers and an increase in efficiencies was absolutely necessary.
“It is a fact, and a condition in the IMF-EU deal. If the efficiencies are not achieved and numbers are not reduced, then the issue of pay is back on the agenda.”
Speaking about the revised memorandum, Mr Noonan said the outcome was satisfactory. The memorandum would build up confidence and showed the troika was willing to negotiate with the new Government, he said.
“They were prepared to take out some of the unpopular things that we have identified and are prepared to replace those conditions with proposals from the programme for government.
“People argued that we could not change a comma in it,” he told RTÉ.
