By Nick Mann | 26 April 2012
Ireland has passed the latest review of progress towards the targets set by the European Union and International Monetary Fund’s €67.5bn bailout programme.
The EU, IMF and European Central Bank ‘troika’ said today that Ireland was ‘on track’ to meet the programme’s objectives of sound public finances, financial sector reform, sustainable growth and job creation.
‘Ireland’s programme implementation continues to be strong,’ they said. ‘Fiscal targets for 2011 were met with a healthy margin and the consolidation remained on track in the first quarter of 2012.
‘The authorities have also pressed ahead with comprehensive reforms to restore the health of the Irish financial sector. Market confidence in Ireland’s policies has improved, contributing to some stabilisation in Irish bond spreads, although they remain elevated.’
The successful conclusion of the review – the sixth quarterly inspection carried out by the troika – paves the way for Ireland to receive its latest tranche the bailout funds, including €1.4bn from the IMF and 2.3bn from the EU.
In their conclusions, the troika said Ireland’s 2011 government deficit of 9.4% of gross domestic product – excluding funds used for bank bailouts – was ‘well within’ the ceiling set of 10.6%. Further public finance targets set for March 2012 had also been met, and the budget was on track for achieving the 2012 deficit ceiling of 8.6% of GDP.
But ‘considerable challenges’ remain, they said. Growth in 2012 is expected to be just 0.5%, with domestic demand continuing to decline and ‘relatively low’ growth in overseas trade. The banking sector also faced ‘difficult’ market funding conditions.
‘Strong policy efforts by the Irish authorities, together with the support of Ireland’s partners, will be needed to achieve the goals of the programme in these challenging circumstances,’ they said.
The Irish finance department welcomed the troika team’s conclusions, which it said, showed ‘the ability and the commitment of the Irish state to implement a challenging programme effectively’.
