The 2012 Article IV Report on Ireland and the Seventh Review of the Extended Arrangement with Ireland are available together in this document.
The IMF has also published a Selected Issues Report on Ireland.
Author: Seamus Coffey
The introductory statement from Mario Draghi is now available. The ECB have also posted some additional notices following today’s Governing Council meeting.
Mario Draghi’s introductory statement is here. Parts of the following extract were re-read by Draghi in response to some predictable questions early in the press conference.
The Governing Council extensively discussed the policy options to address the severe malfunctioning in the price formation process in the bond markets of euro area countries. Exceptionally high risk premia are observed in government bond prices in several countries and financial fragmentation hinders the effective working of monetary policy. Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner. The euro is irreversible.
In order to create the fundamental conditions for such risk premia to disappear, policy-makers in the euro area need to push ahead with fiscal consolidation, structural reform and European institution-building with great determination. As implementation takes time and financial markets often only adjust once success becomes clearly visible, governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial market circumstances and risks to financial stability exist – with strict and effective conditionality in line with the established guidelines.
The adherence of governments to their commitments and the fulfilment by the EFSF/ESM of their role are necessary conditions. The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective. In this context, the concerns of private investors about seniority will be addressed. Furthermore, the Governing Council may consider undertaking further non-standard monetary policy measures according to what is required to repair monetary policy transmission. Over the coming weeks, we will design the appropriate modalities for such policy measures.
After a temporary misstep the latest Quarterly National Accounts have now been released. For Q1 2012 they show that real GDP dropped 1.1% in the quarter so this poll was fully wrong while this poll was somewhat right.
To add to the confusion the release shows an economy that has contracted but exited recession at the same time. The Q4 2011 change has been revised from a quarterly contraction of 0.2% to an expansion of 0.7% meaning that there was not two consecutive quarters of contraction following the decline in Q3 2011.
In fact, there has not been two consecutive quarters of GDP contraction since the end of 2009. This is very much an L-shaped recession.
The National Income and Expenditure Annual Results for 2011 have also been released. Real GDP growth for 2011 was 1.4% but there was a GNP decline of 2.4%. Nominal GDP was just under €159 billion.
As expected the Balance of Payments shows a small current account surplus for 2011. If the BoP numbers aren’t big enough you can always have a glance at the Quarterly International Investment Position and External Debt figures. The net column shows that there are lots of big numbers on the asset and liability sides.
FTAlphaville have put up a post that links to a draft of the Memorandum of Understanding for the loans to be provided by the EFSF to recapitalise the Spanish banking system.
At first glance there are many similarities to what was followed in Ireland. There is no bailing-in of senior bank creditors and all senior bonds seem set to be repaid in full. An Asset Management Company will be established to remove bad loans from the banks’ balance sheet. There is lots more detail.