PRODUCT PROFILE

Latest Dublin Prices

Roundup-Exports down Imports collapse

Tuesday, June 19 08:13:58

Minister for Public Expenditure and Reform Brendan Howlin has robustly rejected arguments by a leading think tank that attempts to stimulate the Irish economy domestically should be avoided by Government. In its latest Quarterly Economic Commentary, the Economic and Social Research Institute (ESRI) said Ireland would likely need further bailout funding after its current three-year rescue package expires next year. It also stated that the proceeds of any privatisations should be used to pay down government debt rather than on any form of stimulus package. The authors say they would be "very cautious about a domestic fiscal stimulus in Ireland, however funded, as history and experience shows that such a stimulus would have little effect on the domestic economy, but would lead to a worsening of the balance of payments.

"The crises of the 1950s and the 1970s-1980s provide sufficient cautionary evidence that, given the openness of the Irish economy, a large portion of any stimulus would go directly into imports. "Selling State assets to provide a limited, in extent and time, stimulus is not obviously an efficient use of funds," they conclude. When the terms of Ireland's International Monetary Fund-EU bailout were drawn up in late 2010, one condition was that all privatisation proceeds would go to paying down debt. The current administration, which took office in March 2011, has consistently sought a change to this term so that it could fund a stimulus package. Responding to the think tank's latest findings, Mr Howlin said: "Academic research is one thing but the social imperative of getting people back to work is another and is far more important in the current climate."

He said a domestic stimulus package aimed at improving the State's economic capacity was not the same "as the kind of reckless current side spending that has characterised previous government attempts at stimulus". The Coalition had been arguing there was a need for greater focus on growth at European level that would support Ireland's export-led recovery. "Using proceeds from the sale of State assets to pay down debt would only represent a tiny reduction in our overall debt levels," he said. "However, the prospects of getting people back to work will support our domestic economy and generate much-needed confidence in the Irish economy."

Mr Howlin said every option to tackle Ireland's unemployment problem had to be considered. The Irish Times

XXXX

The Irish Infrastructure Fund (IIF), which aims to invest up to E1 billion in Irish assets, has made its first investment through the acquisition of a majority stake in a portfolio of wind farms from the Viridian Group. The fund was established in 2011 with the aim of attracting some E1 billion in investment from Irish and international investors to invest in Irish infrastructure, including assets being disposed of by the State. It has secured investment of E300 million to date.

The Viridian deal, the value of which was not disclosed, will see the fund take a stake of at least 75 per cent across the portfolio of wind farms, which consists of 104 megawatt (MW) of capacity generated by 10 wind farms, eight of which are located in the Republic. Viridian's Energia business will retain the minority interest in the portfolio and will continue to manage the wind farms and to offtake substantially all of the electricity generated by them. The fund is a three-way partnership between Irish Life Investment Managers; the Australian fund manager AMP Capital, which acts as the fund's discretionary investment manager; and the National Pension Reserve Fund (NPRF). The Irish Times

XXXX

NAMA has obtained separate judgment orders totalling more than E71m against two solicitors. They arise out of loans advanced mainly for property developments in the Munster area, including shopping centres and residential developments. The agency is also pursuing a number of businessmen and companies for sums ranging from E2.3m to E50m relating to the same loans. In four different sets of proceedings in the Commercial Court today, Mr Justice Peter Kelly granted summary judgment orders sought by NAMA against solicitor Paul O'Brien, Sunbury, Courtbrack Avenue, South Circular Road, Limerick, totalling just over E58m.

He also granted summary judgment for E13.8m against a second solicitor - Denis McMahon, Beechurst, North Circular Road, Limerick. Arising from the need to address interest and other issues, the judge adjourned to Thursday NAMA's claim for summary judgment orders against a number of other businessmen and companies. The claims arose from 32 separate loans, 24 separate guarantees and indemnities and 79 separate security documents relating to 87 loans which transferred from Allied Irish Banks to NAMA in December 2010.

The large property portfolio involved includes commercial properties, shopping centres, residential developments and residential properties in the Munster area. NAMA brought the proceedings following its rejection of business plans provided by Mr O'Brien and some of the other defendants. The first set of proceedings were against Greenband Investments and MKI Property Investments, both in receivership and now with addresses at Grant Thornton, City Quay, Dublin 2; Paul O'Brien; John Costello, Coast Road, Cahra, Glin, Co Limerick, and John Hegarty, Ballygrannan, Drombanan, Co Limerick.

The case arose from guarantees provided by the three men related to the liabilities of the two companies. Greenband was a property development company while MKI was engaging in developing and selling real estate. Mr O'Brien was a director of both. The judge said NAMA was entitled to judgment for more than E50m against Greenband and almost E22m against MKI over various loans issued since 2006 but adjourned the making of orders against them to Thursday so as to address interest issues. The Irish Independent

XXXX

Exports have fallen to their lowest levels since Mar 2010, while the country's import figures have plunged to lows not seen since Nov 2010, according to the CSO. The seasonally adjusted value of exports fell by E713m (or 9pc), and imports fell by E1,034m (or 23pc).

The decline in imports was mainly due to a fall of E709m in the imports of "other transport equipment" including aircraft. Davy's chief economist, Conall MacCoille, said the figures were consistent with the downturn in the export market. "The relatively weak out-turn in April is consistent with the broad trend of slowing goods export growth.

"But the contribution of the sector to GDP growth could be stronger than the monthly data suggest.

"The monthly data capture physical movement of goods exports rather than value-added. The correlation with the value added contribution to GDP growth has been very poor in recent quarters," he said. All sectors of the economy were hit by a fall in export figures with the exception of exports of petroleum and related products. The Irish Examiner