June 1 (Bloomberg) -- Ireland started counting votes in a referendum on the European Union’s fiscal treaty, with polls before the ballot indicating the compact will pass.
Counting began around the country at 9.a.m. local time after yesterday’s vote on the treaty, with early tallies giving an indication of the outcome by mid-morning. The “yes” camp is confident of victory, with the treaty backed by at least 60 percent, the Irish Times reported, without citing anyone. Turnout was about 50 percent, the Dublin-based newspaper said.
“All of the polls in the final days of the campaign suggest that the treaty will be ratified but the ‘yes’ campaign would undoubtedly have preferred to see a higher turnout,” said Fergal O’Leary, an analyst at Dublin-based fixed-income firm Glas Securities. “If it’s yes, then it’ll be a small positive for Irish bonds, but really the referendum has been overtaken by events elsewhere in the euro region.”
Spain, which nationalized its third-largest lender last month, is trying to buttress its financial system even as the nation’s 10-year bond yields approach the 7 percent level that forced Greece, Ireland and Portugal into bailouts. The May 6 Greek election failed to produce a government, increasing prospects that the 17-member euro may fracture, as parties split over terms of the country’s bailout.
“This is a sign to the world that we are not going in the same direction as Greece,” said Kieran Binchy, a member of Prime Minister Enda Kenny’s ruling party, speaking outside a polling station in Dublin’s city center yesterday.
The yield on Irish October 2020 bonds was unchanged at 7.37 percent today. The euro declined 0.16 percent against the dollar to $1.2344 at 9.14 a.m. Dublin time.
The count can be followed on www.referendum.ie/index.php. A final result is due to be declared by about 4 p.m. in Dublin. The Cork-based Irish Examiner reported that some on the “yes” side were concerned the low turnout meant that the treaty could be defeated.
Former Irish Finance Minister Alan Dukes said yesterday that supporters of the treaty will probably win with a “narrow margin.” Around 3.1 million people were entitled to vote.
The government during the campaign said that if the treaty is rejected, Ireland may not be able to access future bailout funds after its current program runs out at the end of 2013
Ireland’s deficit soared on the costs of Europe’s worst banking crisis, and prompted the state to step out of the bond markets in 2010 and seek a 67.5 billion-euro ($83.3) bailout. The country’s debt agency plans to start selling Treasury bills as soon as next month, with full market re-entry before the end of 2013 when the current aid program ends.
Given developments elsewhere in the euro region, Ireland might not be able to regain full access to markets, Finance Minister Michael Noonan said at a Bloomberg Link conference on May 16.
Not all voters were swayed by the government’s arguments, as some have grown weary of cost cutting. The fiscal compact requires nations to virtually eliminate structural deficits, creates an “automatic correction mechanism” and enshrines the new measures in national law. The last two governments have introduced 24 billion euros of budget reductions since the economy went into recession in 2008.
“I voted ‘no’ out of fear of more austerity,” said Aoife Farrell, 28, a student at University College Cork, in the south of the country. “We should be negotiating an alternative solution and sending that message.”
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