IMF names its price

IMF names its price
- New threat to public sector pay
- State must give weekly updates
- Lenihan: 'no option' on terms

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By Emmet Oliver and Anne-Marie Walsh
Thursday December 02 2010
PUBLIC sector workers will have to meet savings targets within just nine months or their pay will be cut.

The new threat to wages is included in a list of stringent conditions outlined by the IMF and EU last night as the price of the €85bn bailout.

The tranches of loans to keep the country afloat will only be paid over if severe targets are met -- and to strict deadlines.

The terms of the deal clearly state that if any "shortfall" in savings from the public sector occurs, a fresh reduction in the "public service wage bill" will be considered by the end of next September.

Finance Minister Brian Lenihan said the Government had no option but to accept the terms.

Other conditions attached to the deal are:

Every week, the Government must tell the IMF, the EU and ECB what money it is taking in and spending.
The banks must reveal what loans they've given out every week.
The numbers and salaries of all those working in the public sector must be disclosed every three months.
The banks must give detailed information on deposits every month, including how long deposits will stay in the banks and whether they're from householders, companies or other banks.
The banks must state how much debt they have falling due over the next 36 months on a monthly basis.
Sheltered professions, including lawyers, doctors and pharmacists will face radical changes within nine months as part of a plan to drive down costs and increase growth in the services sector.
The State will have to sell off its stakes in Irish banks "within the shortest timeframe possible".
The document goes on to spell out the need for cutbacks of €6bn in 2011, €3.6bn in 2012, and another €3.1bn in 2013.

Water charges will be introduced earlier than expected in 2012 or 2013, according to the documents. Property tax will be gradually increased on a yearly basis once it is introduced in Budget 2011.

The document also commits the Government to a radical restructuring of the banks and junior bondholders will be asked to share some of the pain.

The stringent conditions are included in an agreement signed by Finance Minister Brian Lenihan and Central Bank Governor Patrick Honohan and sent to European finance ministers, EU Commissioner Olli Rehn and IMF chief Dominique Strauss Kahn. Mr Lenihan and Mr Honohan claim the measures are "adequate", but admit further measures "may become necessary".

The demand for a weekly update on the Government's cash-flow position could stretch government departments and state agencies, many of whom only compile such information on a monthly basis now.

The Government will also introduce a new law to prevent it running up excessive budget deficits and will cap the amount of spending in each quarter.

Semi-states

The document released yesterday also refers to the sale of semi-state companies, with the proceeds being used to reduce the national debt.

But it's the potential cut in public sector pay that is likely to be most contentious. It has already been cut by an average of 14pc through the pension levy and last budget pay cut.

A recent Irish Independent investigation of the progress of reforms under the deal revealed that major deadlines have already been missed.

They included the introduction of an extra hour's work each week by teachers and lecturers and a new teaching contract by the start of the last school year.

SIPTU general president Jack O'Connor told the Irish Independent last night the trade unions would cooperate with reforms. He said it was likely that progress would be made by the time of the deadline.

However, he warned if there was a "unilateral departure" from the agreement when staff were compliant, "we'll have to respond".

"I don't think any of it is fair," he said. "How could it be fair that everybody in Ireland who had nothing to do with the cause of the collapse has to spend the next seven years paying for it just in order to rescue the French and German banks?"

Mr Lenihan told the Dail the Government would have to "consult with the European Commission, the European Central Bank and the IMF" about making changes to economic policy which differ from the agreed plan.

Fine Gael and Labour -- the parties likely to form the next government -- claimed the multi-billion bailout deal has "tied their hands".

But Mr Lenihan said the Government had no option but to accept the terms