Month: May 2011

CSO Access to Finance Survey

Here‘s a new and extremely useful survey released by the CSO on access to finance. The survey focuses on SMEs. Specifically:

The scope of the survey was enterprises in the non-financial market sectors … that employed between 10 and 249 persons in the year 2005 and which continued to employ at least 10 persons at the time of the survey (September 2010).

There’s a lot of information in it but the key point is the following:

Enterprises that applied for loan finance had a success rate of 90% in 2007, compared with 50% in 2010. Enterprises applying to banks for loan finance were successful in 95% of cases in 2007, while in 2010 the success rate dropped to 55%.

This survey is part of an EU-wide initiative so we can find comparisons for the figures. See page 11 of this document. The rejection rates in Ireland seem to be far higher than in other EU countries. (In doing these comparisons, note that in the reporting of the Irish survey results “The success rates in this table reflect the share of enterpises that were fully or partially successful in obtaining finance.”)

This seems to pretty definitively disprove the “weak demand” explanation for falling credit.

Paul Krugman: When Austerity Fails

Paul Krugman gives his assessment of Europe’s crisis resolution policies: NYT article here. 

IMF Staff Report and Conference-Call Transcript

The new IMF Country Report is available here.    A transcript of yesterday’s conference call following the release of the report is also available (see here).   Dan O’Brien provides analysis here.  Update: Additional analyses from Colm McCarthy (see here) and Cliff Taylor (article; SBP editorial). 

It is encouraging that both the IMF and the European Commission are impressed with the government’s implementation of the programme.    The unavoidable fact remains, however, that bond markets are unconvinced on Ireland’s long-term creditworthiness.   Not too surprisingly, the IMF is more willing to be critical of Europe’s approach to resolving the crisis.   It is becoming increasingly evident that uncertainty about the evolving balance between bailouts and bail-ins is making investors shun Irish bonds.   The critical challenge is to convince investors to provide new funds to Ireland, which is now being hampered by fears of being caught up in any future bail-ins.   It is also interesting that the European Commission is more open than the IMF to a modest speeding up of the fiscal adjustment.   This could be viewed as a high-return investment in reinforcing the credibility of the government’s capacity to see through the necessary adjustments, which already differentiates Ireland from Greece and probably Portugal.     

The Troika Review: New Financing Plan

The European Commission has released its detailed report on the Troika’s recent review of the Ireland deal: it is here.

The revised financing plan is especially interesting on page 21.

Clarity needed when figuring out Government debt

Tony Leddin and Brendan Walsh provide additional clarity on the government’s net debt situation in today’s Irish Times, with an attempt to reconcile figures from Morgan Kelly and the NTMA.  

Seamus Coffey’s detailed response to Constantin Gurdgiev is also helpful in this regard.