Ireland continues to achieve Troika targets

Thursday 12 July 2012 22.23
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Ministers speak of success on targets, but warn of long road ahead
Ministers speak of success on targets, but warn of long road ahead
Troika to make over €2.5 billion available to Ireland after latest review
Troika to make over €2.5 billion available to Ireland after latest review

Ireland's implementation of its IMF/EU/ECB bailout programme remains strong in a challenging environment.

In a statement today, the Troika noted that the recent notable decline in bond yields has underlined the increasing confidence in Ireland's strong capacity to implement adjustment policies.

It said it also reflects the recent euro area summit statement.

But it said that the ongoing household balance sheet repair and the still weak labour markets hinder growth in the domestic economy.

The Troika said growth prospects for the rest of 2012 and into 2013 remain modest, with weak growth in our trading partners dampening export demand despite further competitiveness gains.

The country's budget deficit is still the largest in the euro zone, it also pointed out.

It warned it is essential that the Government maintains ''prudent'' control of expenditure, including in health care.

Ireland's rate of unemployment remains ''unacceptably high'' and that generating growth and jobs on a sustainable basis remains a critical priority, the Troika memo cautioned.

''The objectives of Ireland's EU-IMF supported programme are to address financial sector weaknesses and to put Ireland's economy on the path of sustainable growth, sound finances and job creation, while protecting the poor and most vulnerable,'' today's statement said.

The IMF also reiterated its standard line that the proposed €3.5 billion in savings in the upcoming budget will help bring the deficit down significantly in 2013.

The Fund also said that the Croke Park agreement is delivering the budgeted wage bill savings that it promised.

At a press briefing in the US, IMF spokesman Gerry Rice welcomed the proposed breaking of the vicious cycle of bank debt being turned into Government debt which burdens the economic recovery in Ireland.

He said the European Central bank and the IMF were discussing technical solutions with the Government to add to Ireland's well performing adjustment programme.

The conclusion of this latest review - the programme's seventh - will make IMF funds of €0.9 billion and EFSM/EFSF funds of €1 billion available to Ireland, while other EU member states are expected to give a further €0.7 billion through bilateral loans. The next review mission is due in October.

Ireland achieving all its Troika targets

Ministers Michael Noonan and Brendan Howlin have said that Ireland has successfully concluded the seventh review of the Programme of Assistance with the EU, the ECB and the IMF.

''In line with each of the previous six quarterly reviews, Ireland has continued to achieve all of the targets set under our programme,'' the ministers said in a statement.

Speaking at a press conference, Finance Minister Michael Noonan said that he expects the country's debts to peak at about €117 or €118 billion next year.

He said that while the country can sustain debts of about €117 billion, it will be like ''keeping the hand brake'' on the country's growth prospects.

Public Expenditure and Reform Minister Brendan Howlin said the country still has a difficult journey to travel with a very difficult budget ahead.

He said that we have to make sure that there is a return of confidence and stimulus back in the country, while he also said the issue of unemployment - and especially long term unemployment - is a priority.

The Ministers said that this latest review had involved a detailed assessment of the fiscal position, the macroeconomic outlook and progress on the restructuring of the financial sector and broader structural reforms.

It also provided for discussions between the Government and the external partners on adapting the Programme of Assistance, to improve its effectiveness in supporting the economy's potential to grow and create jobs.

''We are pleased to confirm that halfway through the programme we continue to meet all our targets. All measures have been implemented and the programme remains on track. This successful outcome illustrates, once more, the ability and the commitment of the Irish State to implement a challenging programme effectively,'' the Ministers said in today's joint statement.

After the latest Troika review, an indicative timetable for asset sales in now in place and the Government will give progress reports in the next two quarters on the steps being taken for asset sales to start in 2013.

The Government statement said that the Department of Social Protection has continued to build on progress seen so far in enhancing the labour market activation services and will now take steps to increase the number of unemployed referred to training courses and employment supports and improve the ratio of vacancies filled off the Live Register.

The statement also said that measures to address the emerging overspending in the health sector are to be specified before the end of September, while housing assistance reform will be examined.

On the banks, the Troika found that the banks' deleveraging is in line with or slightly exceeded forecasts. ''Fire sales and excessive deleveraging of core portfolios will be avoided so as not to impair the flow of credit to the economy,'' the statement said.

Permanent TSB's restructuring plan continues to be developed and progress will be made over the coming quarter, it added.

Government sticking to growth targets for 2012

The Finance Minister also said the Government was sticking to its forecast for gross domestic product growth (GDP) of 0.7% for this year despite CSO figures showing an unexpected contraction in the first quarter of the year.

While GDP fell by 1.1% between January and March, robust growth in exports, which weathered the slowdown in the global economy, gave the government hope of staying on top of its fiscal targets.

"There is nothing in their figures that would make us shift from an estimate of growth of 0.7% for this year. We're sticking with that, we think it's achievable," Michael Noonan told today's news conference.

Mr Noonan also said today that the Budget will most likely be held on the first Wednesday in December. ''But don't hold me to that date,'' he added.

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