Gillian Edgeworth
In reality, success on the second and third pillar is likely to prove insufficient unless the first is addressed in a sustainable manner. Agreeing on a re-structuring plan for the banking sector is complex, not least because of the number of competing stakeholders involved. Upon announcement of the IMF/EU programme at the end of November last year,
In assessing progress on the three pillars to
Fiscal performance and efforts to restore competitiveness are more encouraging. Following four austerity budgets since late 2009, recent months have finally seen central government revenue growth in year over year terms turn positive once again.
From a primary deficit of 9.6 percent of GDP in 2010, excluding bank support measures, the programme targets a primary surplus of 1.2 percent of GDP by 2014. The main opposition party, Fine Gael, has pledged support for these targets. Meanwhile, both services and manufacturing exports show expansion, while the central bank's real harmonised competitiveness indicator - real effective exchange rate deflated by GDP - shows a return to where it stood in the third quarter of 2002, down 12.3 percent from its peak. From almost seven percent of GDP in mid-2008, the current account deficit should have narrowed to within one percent of GDP by the end of last year. After a cumulative peak to trough decline in GDP over in excess of 13pp, the programme assumes GDP growth of 0.9 percent this year, followed by 1.9 percent in 2012. This looks viable assuming
Slimline Banking
With assets at 470 percent of GDP at the end of December, the domestic banking sector in
The approach will be multi-pronged. On top of approximately
Separating The Sovereign
While all of the above is necessary, concerns about the extent to which the sovereign's balance sheet will be further damaged by banking sector losses means that convincing both the domestic general public and markets on the viability of the plan is a struggle. Since the end of 2007, the sovereign has seen gross public debt rise from 25 percent of GDP to just below one hundred percent last year. Net debt (adjusting for assets held by the
Weighing the costs of the banking crisis to the sovereign relative to other countries since the collapse of
Crunch Time
The event calendar over the coming months is jampacked. By the end of March the PCAR and PLAR results will be made public, determining any additional capital shortfalls to be met. By end of February, the banks must submit plans to reduce the size of their balance sheets. A general election is scheduled for
Some re-negotiation of the IMF/EU package appears inevitable. Getting the mix right will be central to
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Available at Amazon.com:
Aftermath: Following the Bloodshed of America's Wars in the Muslim World
Displacement and Dispossession in the Modern Middle East (The Contemporary Middle East)
The End of History and the Last Man
The Clash of Civilizations and the Remaking of World Order
The Tragedy of Great Power Politics
The End of the Free Market: Who Wins the War Between States and Corporations?
Running Out of Water: The Looming Crisis and Solutions to Conserve Our Most Precious Resource
Bottled and Sold: The Story Behind Our Obsession with Bottled Water
Water: The Epic Struggle for Wealth, Power, and Civilization
At War with the Weather: Managing Large-Scale Risks in a New Era of Catastrophes
Friendly Fire: Losing Friends and Making Enemies in the Anti-American Century
Dining With al-Qaeda: Three Decades Exploring the Many Worlds of the Middle East
Uprising: Will Emerging Markets Shape or Shake the World Economy
Copyright 2011, Chatham House; Distributed by TRIBUNE MEDIA SERVICES, INC.