Statements on the Troika Review Mission to Ireland

The Troika statement is here.

The Department of Finance’s statement is here.

25 replies on “Statements on the Troika Review Mission to Ireland”

The revised projection for 0.5% GDP growth in 2012 is pure guesswork. It could be higher or lower. The actual growth rate will play a big role in determining whether we continue to meet our targets. But it would be churlish to fail to acknowledge the huge steps that have been taken, and taken by a Government that has maintained vital public support for its actions.

It’s interesting to compare and contrast the subtle nuances in the two statements. Under the general rubric of structural reforms, jobs, growth and competitiveness we have, first, the IMF:
“Reforms of sectoral wage agreements, to make wage-setting in occupations hard hit by recession more responsive to economic conditions, have been submitted to parliament. Asset disposal plans are being finalized with the primary goal of strengthening competition and efficiency in key sectors while securing value for the state.”

and then the DoF/DPER:
“An ambitious programme of structural reforms to support job creation, increase Ireland’s competitiveness and boost potential growth is being put in place.
We will take steps to strengthen activation and training policies to help jobseekers get back to work under the new Pathways to Work.
Reforms in the water sector is underway, together with a strengthening of competition policy enforcement.”

The IMF is strong on the ‘labour theory of cost’ which is advanced by the right, much of the media (except in their case) and, sadly, many economists. This is based on the convenient fiction that the markets for all factors of production other than labour are operating efficiently – and that any inefficiencies in the final markets for goods and services are due to inefficiencies and rigidities in the labour market. There are, of course, glaring inefficiencies in segments of the labour market, but they are put in the shade by woeful inefficiences in all other factor markets and in the markets for many final goods and services.

But we don’t want to talk about these because those who benefit from these inefficiencies (in the form of rents or monopoly profits) are either the principal financiers of the political system or those who exercise political and economic power or both. Although the Government, in the main, subscribes this fiction, it, understandably, is not keen to advertise this and prefers to focus on all the ownderful things it is planning to do on job creation and labour activation.

Then the IMF focuses on state asset disposal, but this, clearly, is something about which the Government is not entirely comfortable, so it majors on the creation of Irish Water. As for this IMF guff about “strengthening competition and efficiency in key sectors while securing value for the state” I still haven’t made up my mind as to whether the IMF is actually really dumb on these issues, or choosing to act dumb – or even that it has given up the ghost and given in to the Government’s determination to do as little as possible on state asset disposal.

And as for this ‘programme of major structural reforms’ and ‘strengthening of competition policy enforcement’ I’m sure the regulator-capturers, rent-seekers and consumer-gougers must be quaking in their boots. Who does the Government think it is codding?

I never had any expectations of something sensible emerging from this Government in this area – and even less from the Commission/ECB, but I had some expectations that the IMF might force the pace a little. I probably should known better.

@ Liam Delaney

The gentleman to whom the question was addressed is Klaus Masuch but regarding the Anglo burden he could be classed as a Sadist rather than a Masuchist.

Its all very sad.
I am expecting a more dramatic fall of western civilisation over the next 2 to 3 decades as the present “investments” bear fruit.
The people will eventually welcome the Barbarians as their saviours just as they did during Romes fall.

Independent states do not have to sell anything to get money…..its easy you just print it , like the IMF & ECB prints it but gets interest for some funny reason.

Just like before, the pond algae floated to the top , blocking out the light & destroying the ecosystem.
Before the got a monopoly on grain / credit / energy systems now its oil / credit / energy systems.

When you consider the fiasco of the Troika reviews in Greece, there is cause for genuine relief that Ireland is making progress, and meeting all targets in 2011 (following agreement to allow some tasks to slip) is no mean feat, and a few people deserve pats on backs.

Having said that, it is becoming clear that the feted negotiations of the Anglo/INBS promissory notes is illusory. When asked today, the IMF said that they had received a request to have technical discussions on the PNs. And that was it. Minister Noonan is claiming now that last Thursday there was agreement by the Troika to produce a policy paper to change the deal on PNs, but as far as the press conference was concerned today, there was no such thing. Somehow, the Troika has more credibility in this matter than a Govt desperate to deflect the expected rage at the payment of another €1,250m to Anglo’s bondholders next week.

The downgrade in Ireland’s GDP projection to 0.5pc is getting headlines around the world. Not so much here. It would be interesting to hear what our Fiscal Advisory Council make of this, and what impact such a downgrade would have on our economy generally. But then again, the fiscal council isn’t even on a statutory footing yet, because the bill to give it effect has been deferred to Q2, 2012 (one of the agreed slippages)

Let us not forget that the ECB directly precipitated the bailout. Emperor Trichet and his court jester LBS went all frothy at the mouth. Their main concern/demand was that there would be a breakneck pace of deleveraging. This demand was utterly unfeasible, and Irish banks are still dependent on ECB funds over a year later. Indeed the ECB finally realized medium term funding was needed (Irish banks took 16’% of it).

The ECB offered nothing new or useful in their bailout ‘solution’ – and their hysterical _political_ intervention was way outside their charter. Furthermore it is highly dubious that the ECB, a failed entity(with a failed charter) should ever have been an equal partner in the ‘Troika’. The IMF should have had lead, Prof Honohan and his CS contacts damaged not merely Ireland, but Europe by putting the lunatics in charge of the asylum.

@ Jaqdip Singh –
Pats on-the back? Indeed…………

‘Pats on the back’ for –

– decimating the domestic economy and its citizens with it
– continuing with the FF/Green policies
– fending off the vested interests in NAMA(upward-only rent reviews),the banks(all that money available for sme’s and ensuring their voices are paramount in shaping the new bankruptcy legislation),public sector(CPA and all those measurable improvements in productivity and processes),the professions(gosh how they have been brought to heel),the structural reforms(so much happening – property charges/water metering/’household charge’,etc,etc,
– the huge increase in ‘lifestyle-emigration’ as quaintly described by minister noonan
– the decimation of front-line services while back-office continues to flourish
– the semi-state ‘cull’ – a veritable bonfire!
– the wonderful zombie banking pillars
– the decimation of capital spending in order to preserve current spending levels
– the protection of the salary/pensions of the 600+ administrative ‘republican guard’
– taking the ‘credit’ for reducing interest costs of our horrific financial burdens – without acknowledging the crucial part played by the Greek situation..

– and so on and so on – yes ‘pats on the back all around for those concerned – protected and privileged as they are….

Question for Istvan ?
You said the Baltics are growing strongly.
What is their domestic demand doing these days ?
Are they exporting their wealth also ? ……… funny enough a bit like us really.

By the way I like your work

Transition to what though………. the stone age ?

– your goal seems to be directing all wealth towards the financial centres so that yee guys have some resourses to do a bit of charity work of course.
If it looks like a duck ,swims like a duck & quacks like a duck………….

So, with a good report like that, no doubt they are confident of a surge in growth to make the debt burden go away. No? They want more hari kari ?

From a previous post:

“Meanwhile the Irish government are in some confusion regarding the Draft. Enda Kenny has flagged in the Dail that it is not his intention to do anything regarding sending the draft to the Attorney General, developing a position on a possible referendum, until he gets advice from the next meeting of EMU leaders at the next summit, end of January, Jan 30. This might explain Leo Varadkar stating that he could not discuss the question of the Fiscal Compact as it had not been finalised. It would appear Kenny and Varadkar are both in the dark on the matter; they intend to keep the country in the dark on this as well.

So next meeting of the summiteers held to discuss the Fiscal Compact should be fun?

Sarkozy: ‘Have you examined the Fiscal Compact, Mr Kenny?’

Kenny: ‘No, I was waiting to get its final wording today from you and Angela?’

Merkel: ‘You did not examine the proposed Draft and put it to the Irish Attorney General for his opinion?’

Kenny: ‘No point, it isn’t the final wording.’

Merkel: ‘The journalists did not release it in the media for general discussion and further advice”

Kenny: ‘Now we don’t want to go upsetting people with referendums and complex decisions that even I can’t understand!’

Kenny: ‘Just go ahead and add in any final changes there. I’ll rubber stamp them.’(Winks at Merkel, who is appalled)

Sarkozy/Merkel in chorus:

‘Ooh la, la…….’

Uncomfortable, embarrassed laughter ensues…

Our fiscal travails with the Troika of Doom get more absurd by the day; looks like a Hungarian style financial meltdown goulash…

@ Vinny +1

It is more a kick up the backside they need and they will get one as soon as this referendum is put in train. The government are right to expect an enormous back lash from those outside the Croke Park agreement.

The failure or more accurately refusal to answer VB’s question was the telling moment.

@ Jagdip

“Minister Noonan is claiming now that last Thursday there was agreement by the Troika to produce a policy paper to change the deal on PNs, but as far as the press conference was concerned today, there was no such thing.”

via Bloomberg


@ Vinny +1

It wasn’t Nama that influenced the government banning upward-only rent reviews in existing commercial leases, it was the Fine Gael Landlords Association aka Property Industry Ireland among many other vested interests. This lobby group’s directors included well known Fine Gael grandees and donors including a former Fine Gael Taoseach’s son Mark Fitzgerald. Sherry Fitzgerald auctioneers were the number one cheerleader/propagandist for the property bubble.


Thanks! Does anyone know what a “technical note” is? Would a “technical note” be the same as a “policy proposal”? Or would a “technical note” be an explanation for dummies as to how these promissory notes work? Would a “technical note” set out options to reduce the cost of the promissory notes?

We may not know what a “technical note” is, but “technical discussions” are different to “review mission” or “negotiation discussion”. And if “technical notes” have similar meaning then I don’t see how working on a “technical note” even gets us to a renegotiation of the PNs.

@ Jagdip

I believe a “technical note” would simply flesh out the Irish arguments, show what upside there was, and what would need to be done in terms of financial wizardry to put in place. Would not advocate Yes or No, simply a case of “if you want to know what they’re asking for, how it would work and what it would do, read this…”.

Karl Whelan on Vincent Browne(TV3) last night called this promissory note/technical discussion/paper/note nonsense absolutely spot-on and placed Honohan and his minions firmly in the spotlight….along with our current administration and ECB.
Nice one!

I am quite fond of Dr. Gurdgiev’s outlook on the issue:

“Given that since the previous review, Irish economy has posted”

-A full quarter of GDP & GNP contraction
-Missed targets on fiscal side covered up by vague reforms papers publications and capital spending cuts, plus ‘temporary’ tax measures
-Rampant tax increases & state costs rises, covered up by deflation in the private sector economy
-Stuck sky-high unemployment, with massive contractions in labour force and emigration
-Another botched ‘austerity’ budget with hope-for revenue measures substituted for reforms of spending
-Repayment of billions in bust banks bonds
-Continued lack of recovery in its banking sector

What part of (1)-(7) above constitutes ’successful completion’ of the review?”

Transcript of the exchange between Masuch (ECB) and Browne here:

And Quote from Masuch on paying off of unguaranteed senior Anglo bondholders:

“I can understand that this is a difficult decision to be made by the government and there’s no doubt about it but there are different aspects of the problem to be, to be balanced against each other and I can understand that the government came to, came to the view that, all in all, the costs for the, for Irish people, for the, for the stability of the banking system, for the confidence in the banking system of taking a certain action in this respect which you are mentioning could likely have been much bigger than the benefits for the taxpayer which of course would have been there. So the financial sector would have been affected; the confidence of the financial sector would have been negatively affected, and I can understand that there were, that there was a difficult decision but that the decision was taken in this direction.”

So in this version it was a government decision.



“In Brussels, an early draft of the EU’s new treaty stipulates that no country will be able to tap the permanent bail-out fund or European Stability Mechanism unless they sign the pact committing them to near-balanced budgets, with little leeway for deficits even after an economic shock.

The text is aimed squarely at Ireland, which may have to hold a referendum on the new treaty. If the Irish vote ‘No’ – as thought likely in the current fractious mood – it would block aid disbursements under Ireland’s EU-IMF loan package once the new bail-out fund is up and running.

Critics say the move is a pressure tactic to induce Dublin to pass the treaty through secondary legislation without a vote.”

Growth Watch: an occassional posting covering meaningless statements about economic ‘growth’ that usually indicate the speaker is hoping/expecting someone else to do something about it.

(HT BBC) The heads of the IMF and World Bank have joined other influential figures in calling on countries to implement free trade, reform their economies and protect economic growth. They warned that austerity programmes should “promote rather than reduce prospects for growth”.

“Economic growth stimulation is one of Denmark’s EU Presidency priorities”, says Danish ambassador to Sofia.”

(HT Bloomberg) “Prime Minister Mario Monti’s Cabinet will pass a plan today designed to boost competition and spur economic growth,” says some Italian PR Guy!

Oh yes, and there are reports coming out of Athens at the moment on a deal having been agreed between Greece and its private bondholders.


Can’t say I blame you – their anti-EU agenda seems to get more rabid by the day.

However, I’m sure everything possible is being done behind the scenes to try and avoid a referendum here at all costs. Ireland has a bad track record of ‘voting the wrong way’ and as we know, referendums are not exactly top of Merkozy’s list of good things for periphery countries to be doing… or we might end up having Enda replaced with a technocrat formerly of, oh I don’t know, maybe GS or GC (Gonzaga College)? Though perhaps describing PS as a ‘technocrat’ is a bit of a push.

“Economic growth stimulation is one of Denmark’s EU Presidency priorities”

Barbara Erhenreich had a piece on this sort of language to describe the economy, as if it was some sort of giant clitoris

In other news, Vincent Browne owning Mr Masuch is now on youtube


It’s a pity the people who really should be running the country are busy driving taxis or cutting hair.

Why is there an expectation that the Troika would push for reforms?

The Troika is in Ireland to secure repayment of the debt that the Irish government has undertaken to repay. A reformed economy will probably be more able to repay but surely the invitation of the Troika is only for the short-term?

If the invitation is for the short-term, then I’d assume that the Troika is targeting a resolution of the crisis in the short-term. That would explain the Troikas preference for asset sales.

IF the people of Ireland want reform, then it is up to the people of Ireland to demand reform. If the people of Ireland would like to ensure reform by having the Troika to rule Ireland permanently then I’m sure that can be arranged WITHOUT also forcing all of the Euro-zone to also submit to unelected ‘Technocrat’ rule.

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