IMF dismisses Ireland’s objections to repaying bondholders; refers to a cost equal to 2% of our GDP as “rather modest”

Meet Craig Beaumont who has been the IMF Mission Chief for Irelandsince March 2011, according to his apparent LinkedIn CV (I say “apparent” because LinkedIn will allow any old rubbish to be published on their website, including bogus CVs – this one looks genuine though). Craig doesn’t have a biographical note or photograph on the IMF senior personnel webpages but there is a photograph of him on his way into Ireland’s Department of Finance, here.

Two weeks ago the IMF held a press conference on Ireland where Craig responded to a question on Ireland burden-sharing the cost of repaying bondholders in zombified Anglo Irish Bank and Irish Nationwide Building Society (now merged and renamed the Irish Bank Resolution Corporation); and this was part of his response “the amount of senior unsecured debt has declined to a rather modest sum so that I don’t think that it makes a material difference.”

In fact, it – the amount of senior unsecured debt – totals some €3bn or 2% of our GDP. . And remember that for Ireland, it is our GNP which is a better indication of national income because it excludes multinational income which is effectively laundered through the Irish tax system, and on a GNP basis, the remaining senior bond payments in IBRC are closer to 2.5%.On 25th January, 2012, Anglo Irish Bank (or more correctly the Irish Bank Resolution Corporation, IBRC) is set to pay €1,250m to unsecured unguaranteed senior bondholders. The bond – reference XS0283695228, details here – was originally issued on 25th January 2007 and despite Minister Noonan’s bold announcements in the US last summer, it is set to be repaid in full; this is largest single payment remaining of the €3bn in total.

So, according to Craig these payments are “rather modest”. Just imagine if Craig turned up in the UK and suggested to the UK government that it pay €36bn (2% of the UK GDP of GBP 1.5tn using current exchange rates) to creditors of bust banks! We probably don’t have to imagine; we already saw theUKreaction to providing a €50bn loan – “loan”,mind you: in other words there’s a good likelihood of getting the money back – to the IMF as part of a €200bn European contribution to a fund to help mostly EuroZone countries. I wonder what the reaction in Paris or Berlin/Frankfurt would be, if it was suggested that a payment by either country to bondholders in a thoroughly zombified bank be made, and that further, such a payment was “rather modest”? 2% of French GDP is about €40bn; 2% of German GDP is about €60bn

And yet when Craig waved away 2% of our GDP as “rather modest”, there was not a peep from our politicians – either Government or Opposition.

Craig will be back in Ireland next week, from 12^th January as part of the next troika review of the bailout programme. Maybe he might be called on to provide a further explanation of his “rather modest” comments.

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700 pay the new €100 property charge : Judas goats or patriotic realists?

It is being reported by RTE this morning that 700 “households” have paid the new €100 property charge (or “tax” as some call it) in the past day. The statistic comes from a body most of you will never have heard of before – the “Household Charge Project Board”. An enquiry about this new body sent to the Department of the Environment Community and Local Government press office this morning, was referred to the Local Government Computer Services Board which in turn has a link to the Local Government Management Agency  which has yet to respond. So this new body, the “Household Charge Project Board” – we don’t know who manages it, how much it costs to operate, its organisation structure and names of key personnel. Is it a new quango? Maybe, and given the recent history of party political stuffing of State agencies, is it run by Fine Gael/Labour apparatchiks at our expense? Who knows.

Yesterday the new website for the administration of the €100 property charge (tax) went live – householdcharge.ie. It sets out the background to the charge and how it can be paid including details of the €25 x 4 instalment plan.

So who are the 700 that have paid the new charge already? We also don’t know, but I can’t help but recall the extensive property portfolio of the pugnacious former TD, Frank Fahey, on which he will need pay €100 per residential property, and I wonder how many of the present Government would it take to arrive at 700 residential properties.

There is already a vocal opposition to the new charge and it has coalesced around the “Campaign against Household and Water Taxes” which describes itself as “a precursor coalition of political and community activists, including trade unionists, tenants association organisers, TDs, and others”. I think the tally of TDs who have said they will not pay the new charge currently stands at 18 out of 166.

So these 700, are they Judas goats – a term borrowed from the livestock industry for an animal which leads others to the slaughterhouse, also known as a “Judas cow”, the Judas goat is trained to lead others to the slaughterhouse, walks out the other side and is rewarded for its repeat efforts. Or do people recognise the €18bn annual deficit this country is running, and they see the €100 charge as a necessary contribution to plug the deficit. Difficult to know, but the unfairness of the charge – which is €100 regardless of whether you live in a mansion or a studio flat, earn €1m or the minimum wage, own your house outright or are shouldered with negative equity – really does stand out, and the view on here is that for the sake of the €160m which the charge is projected to rake in this year, the Government might have waited a few months to implement a better system. Minister Phil Hogan announced another expert group just before Christmas which is set to report options for the implementation of a long term property taxation system by the end of March 2012 and it might be introduced in 2013.

There is a previous blogpost on here which examines the household charge and the legislation which gives effect to it.

UPDATE: 4th January, 2012. There is some information forthcoming from the Department of the Environment Community and Local Government about the structure and activities of the Household Charge Project Board and the system used to collect the new €100 property charge :  the Board is made up of representatives of the Department of the Environment, Community and Local Government, local authorities and the Local Government Management Agency (LGMA) and is in place to oversee the implementation of the household charge. There is apparently no fee is payable for membership of the board.

In addition to the Board, a “bureau” has been established within the LGMA to process declarations and payments and to deal with related queries. This is staffed in the main by existing LGMA/local authority staff and is supplemented by some agency staff as the need arises. These are similar to the arrangements which are in place for the administration and collection of the non-principal private residence charge.

The household charge on-line payment system is also largely built on that which is in place for the charge on non-principal private residences (see here)

The Department claims that every effort is being made to keep costs to the minimum. In this regard, in order to minimise the costs associated with administration and collection of the household charge, the LGMA will collect it on a shared services/agency basis on behalf of local authorities. An on-line system has been put in place to facilitate payment of the charge over the internet. The Department says that Minister, Phil Hogan, would encourage everyone who can do so to use the website for their own convenience, as this will minimise costs associated with the administration and collection of the charge and ensure it raises the maximum net income.

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