By Nick Mann | 25 October 2012
The Irish government has said it is ‘on track’ to meet the goals of its bailout programme after passing the latest review of its economy by the ‘troika’ of international lenders.
In the eighth quarterly examination of Ireland’s austerity measures, the European Commission, European Central Bank and International Monetary Fund today praised the government’s ‘steadfast’ policy implementation.
Ireland is expected to reduce its deficit to 8.6% of gross domestic product this year, despite spending more than planned on health care and social welfare. The Irish authorities are also ‘determined’ to reduce the deficit further to 7.5% in 2013, the troika noted.
The situation has been helped by Ireland’s return to the bond markets, it said. ‘This achievement, despite Ireland's still rising public debt, underlines investor confidence in Ireland’s capacity to implement adjustment policies as well as market expectations of European support for Ireland,’ their statement explained.
However, they noted that unemployment remained ‘unacceptably high’. They called on the government to make its 2013 budget as growth-friendly as possible, while minimising the impact of the country’s fiscal adjustment on the most vulnerable. The government should also intensify its efforts to restore the health of the Irish financial sector, and in particular to reduce bank operating costs.
Irish Finance Minister Michael Noonan welcomed the troika’s conclusions, which mean the country will now receive a further €1.7bn of the €67bn bailout funds available.
But he acknowledged that the ‘real test’ lay in Ireland fully returning to the bond markets and building a ‘sustainable and long-lasting’ economic recovery. Ireland would work towards the measures agreed by the European Council in June, he said.
‘Many challenges remain, including the heavy burden of debt associated with the recapitalisation of the banking sector and work is ongoing with the troika to reduce this burden in line with the June 29 Agreement,’ he explained.
In a joint statement with Public Spending and Reform Minister Brendan Howlin, Noonan added: ‘The programme remains on track and we continue to meet all of our targets. We are confident that the headline deficit targets of 8.6% of GDP will be achieved in 2012 and we remain fully committed to reducing our deficit to below 3% of GDP by 2015.
‘The upcoming Budget will deliver a further budgetary correction. There is no doubt that this will be difficult but Budget 2013 will be as fair and equitable as possible and will be consistent with the government’s key objective of growing the economy and getting people back to work.’
