The EU, European Central Bank and International Monetary Fund have said that Ireland's bail-out programme is on track, with the budget deficit for last year coming in well ahead of target and further progress on reforming the banking system.
But the Troika, in a joint statement, said Ireland faced "considerable challenges", as domestic demand remained subdued, unemployment high, and growth in its main trading partners was slowing.
As a result, projected GDP growth for 2012 has been revised down to 0.5%, from an estimated 1% in 2011.
Speaking at a press conference, Troika officials confirmed earlier comments from Finance Minister Michael Noonan that the three institutions were working together to develop a common paper on a possible alternative to the promissory notes being used to prop up Anglo Irish Bank.
Asked about the potential sale of State assets, Istvan Szekely of the European Commission said privatisation was a long process, and Ireland was only at the beginning. He said there should be no fire sales, and taxpayers must get a good deal.
The Troika also said significant progress had been made in strengthening and downsizing the Irish banking system, noting that banks had achieved better prices for assets they sold than those assumed in the Prudential Liquidity Adequacy Review carried out at the start of the year.
However, it cautioned that economic growth in the country's main trading partners was weakening, unemployment was high and domestic demand remained subdued, all of which posed challenges to economic and budgetary performance in 2012.
The mission said that having found all of the country's targets were met, they will recommend to their respective organisations that funds amounting to €3.2 billion from the IMF and €6.5 billion from the EU/EFSF be released for the Irish programme.
At today's press conference, the International Monetary Fund also said that Ireland should avoid carrying out more fiscal adjustments if it suffers an economic shock this year, but any slippage from deficit targets should be made up later.
"If revenue fell short owing to lower growth, staff favoured maintaining this level of adjustment to avoid amplifying recessionary shocks, especially a severe shock that might be temporary," the IMF Mission Chief for Ireland Craig Beaumont said today.
"I would emphasise at the same time that it is important to preserve the credibility of the medium term fiscal consolidation plan, so there may need to be some phasing of adjustment over time so that you can still make the 3% of GDP target by 2015," he added.
Ireland meeting all of bail-out targets
Earlier, Finance Minister Michael Noonan said Ireland had met all of its targets under the latest review of the EU/IMF programme.
He and Public Expenditure & Reform Minister Brendan Howlin were speaking at a press conference at Government Buildings.
Minister Howlin said he believed the Government would have "a sizeable portion" of money available from the sale of any State assets to invest in job creation.
He said the Government had made progress in convincing the Troika on this issue.
Minister Noonan said personal insolvency legislation had been deferred until the end of April, as the legislation was technically difficult. He said there were no differences with Justice Minister Alan Shatter on the issue.
He also said the Government would have to make a decision on Permanent TSB - particularly on whether it should remain as a stand-alone bank or be merged with another institution - during this quarter.
Minister Noonan said the Government would still sell Irish Life, but only when the market was right. He described the issues surrounding Irish Life & Permanent as the "last piece of the banking jigsaw".
He said Irish bank stress tests would be held at the same time as a planned EU-wide stress test in the autumn. But if that was delayed, the Irish tests would be carried out by the end of November at the latest.
Work being done on alternative to Anglo notes
The Minister said there had been discussions on the promissory notes being used to bail out Anglo Irish Bank.
He said the EU, ECB and IMF had agreed to work together to develop a common paper on a possible alternative to the promissory notes which would be advantageous for Ireland. But he said these discussions were still at a technical and not a political level, and any new scheme would require approval from the 27 EU states.
On the issue of the Anglo promissory notes, Craig Beaumont of the IMF said the Government had requested technical discussion on the cost of the arrangement, and that the official lenders were working towards a technical note on the issue, but that this process was not complete.
Klaus Masuch of the ECB said it was not for the bank to make decisions on this matter. He said the bank had its own rules on these matters, but it was working with the other institutions on a technical solution to the problem.
European Commission mission head Istvan Szekely said the Troika wanted to hear of problems in the programme that were impacting on the unemployed and the most vulnerable in society, whom he said needed to be protected.
But he said groups representing such people needed to do more work. "We need evidence, not beliefs", he stated. He said the Troika was committed to help those who need help.
Mr Szekely also said the sale of state assets was primarily aimed at enhancing growth and productivity in the Irish economy, not at raising money to pay down debt. He said the Troika want to understand the Government's plans in relation to privatisations, and are expecting a detailed set of proposals.
He said it was only when the Troika see these proposals that it can sit down and discuss asset sales and the purposes to which money raised from them can be put.
The troika said it also wanted to see increased flexibility in wage setting arrangements, to enable companies and sectors to find the right wage levels so that companies could return to profitability, workers could be employed and the economy can grow again.
Craig Beaumont of the IMF said the fund still considered allocating losses to unguaranteed unsecured senior bank debt as an option in resolving the Irish banks.
However, Klaus Masuch of the ECB said Ireland needs to consider the spillover consequences from such an action, notably on market confidence in Ireland. He said losing that confidence could prove to be extremely costly to the country.
He noted that the spread on Irish Government debt relative to other high debt euro area states had fallen significantly since last summer on the back of Government credibility earned from delivering on the programme.
