The Fiscal Treaty in the Sunday Papers

The Sunday papers/blogs have some good contributions to the Fiscal Treaty debate.    In the Sunday Independent, Colm McCarthy cuts through much of the confusion with his usual clarity:

This referendum has consequences and is not just an opinion poll on whether people are pleased that we have an enormous debt and an ongoing deficit.

There are two net issues. The first is whether a ‘Yes’ vote would result in additional constraints on Irish budgetary policy in the years ahead.

The second is whether a ‘No’ vote would make the financing of the Government more difficult once the EU/ IMF programme ends in December 2013.

 

You should read the full article for Colm’s analysis of the two issues.   But it is worthwhile to note the conclusions:

The fiscal treaty does not, in the short or long term, create new commitments to budget cuts beyond what is in store anyway. But rejection could result in a sudden drying up of access to finance — and hence an immediate requirement to balance the books — and would be highly disruptive.

This treaty will not solve Ireland’s problems, but voting it down could make a bad situation worse, for no obvious gain.

Cliff Taylor echoes these conclusions in the Sunday Business Post.   The article is behind a paywall, but a fair-use quote gives the gist:

So there is no additional austerity for Ireland which will result from voting Yes.   Austerity is inevitable – we just have to hope that some pick-up in growth will make the sums easier.   And let’s not fool ourselves that a vote here would in some way change the course of what might happen in Europe.   That will depend on the big countries.  Full stop.

If a No vote brings no obvious advantages, it does bring risks.   As the rules stand, we would not have access to the European Stability Mechanism, the new permanent bailout fund.   So, if we need more cash after this bailout runs out – or other forms of support, such as further underwriting – we will not qualify if we vote No.   Sinn Féin has argued that the EU and IMF will not see us stuck.   But why try to find this out?

Finally, Nama Wine Lake, our new national treasure, provides a useful overview of the arguments here.

Reminder: IMF loans more expensive than EU loans

The Sunday Times reports that the IMF could be an alternative source of funding in the event of a No vote.

One point to keep in mind in this debate is that the IMF charges a penalty premium of 200/300 basis points on large loans, whereas the premium has been dropped from EU loans, as decided at the July 2011 summit.

The relevant IMF funding schemes  (Extended Fund Facility, Precautionary and Liquidity Line) are described here and here.

Tax and Multinationals

The NYT has a long article on Apple’s global tax strategies here.

Stability Programme Update

The April 2012 Stability Programme Update from the Department of Finance is now available as well as a short statement from Minister Noonan.

Mrs Merkel gives Ireland the perfect reason to postpone the referendum

In this interview, Mrs Merkel gives the forthcoming Irish referendum as a reason why the treaty should not be renegotiated.

Almost no-one in Ireland thinks this treaty is a good one, and that includes the people who believe that we have no realistic option but to ratify it. Indeed, almost no-one outside Germany seems to want it, including the governments who signed it. It follows that if M Hollande were to lead a push to have it renegotiated, we should support that effort. If our May referendum is an obstacle in the way of achieving that goal, we should postpone it.