Ireland meeting IMF/EU programme targets

Thursday 26 April 2012 18.12
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Ireland continues to achieve targets set under bail-out deal, says Ministers Noonan and Howlin
Ireland continues to achieve targets set under bail-out deal, says Ministers Noonan and Howlin
Finance Minister Michael Noonan says mini-Budget not needed
Finance Minister Michael Noonan says mini-Budget not needed
Brendan Howling says higher proportion of proceeds from sale of state assets to support jobs
Brendan Howling says higher proportion of proceeds from sale of state assets to support jobs
PTSB's impaired assets to go into ''bad bank''
PTSB's impaired assets to go into ''bad bank''

The Finance Minister has said that Ireland has successfully concluded the sixth review of the programme with the EU Commission, the ECB and the IMF.

Michael Noonan said that in line with each of the five previous reviews, the country has continued to achieve all of the targets.

Over 100 actions have now been completed under the programme and over 70% of the available funds have been drawn down.

He told a press briefing today there was ''nothing on horizon that would require a mini-budget''.

Mr Noonan said a deal has been reached on the strategic direction for Permanent TSB. A restructuring plan will be submitted to the EU by June.

He said stress tests on Irish banks due to take place in November, will not now take place until next Spring in line with the rest of Europe, because the troika now believes the banking system here was normalising.

Brendan Howlin said the Troika has agreed a higher proportion of the proceeds from the sale of state assets will be used to support jobs.

He added that the exact amount has yet to be finalised

''We need to implement the plan, but we also need economic stimulus and growth. I welcome the acknowledgement of our troika partners of the importance of the growth agenda to the overall success of the programme,'' he added.

The review, started on April 16, assessed in detail fiscal developments in the country, the economic outlook, progress on commitments on the restructuring of the financial sector and structural reform.

IMF says considerable challenges remain

The IMF, EU and ECB said that the country's fiscal consolidation efforts remain on track this year, but warned that considerable challenges remain.

In a statement, the European Commission, European Central Bank and International Monetary Fund left their forecasts for growth this year unchanged at around 0.5%.

"Overall, 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," the troika said in joint statement.

The joint statement said that market confidence in Ireland's policies has improved, contributing to some stabilisation in Irish bond spreads, although they remain elevated.

It said the general deficit - excluding the cost of supporting the banks - is now estimated at 9.4% of GDP, which is well within the programme ceiling of 10.6%. ''The budget is on track for achieving the 2012 deficit ceiling of 8.6% of GDP,'' the statement added.

The troika said that ongoing work to restore the health of the country's banking system is critical to enabling a recovery in the domestic demand. It noted that efforts to strengthen the quality of bank assets are intensifying through strategies for dealing with mortgage and SME loan arrears.

It added that the personal insolvency reform will further facilitate the resolution of unsustainable debts.

Approval of the conclusion of this review is scheduled to make another tranche of funds available for the country. The IMF will give another €1.4 billion, while €2.3 billion will come from the EU.

The next troika review is due in July.

The IMF has said that Ireland's implementation of the programme remains strong and market confidence in Ireland's programme has improved.

The head of the Ireland mission for the IMF, Craig Beaumont, was speaking to journalists on a conference call in the US.

Mr Beaumont told the conference call that, while recent developments might be showing some signs of positive underlying trends, domestic demand is still weak and unemployment high.

On the promissory notes, the IMF says it is working on a strategy that would enhance the ability of Ireland to get back to the markets but Mr Beaumont did not outline a time scale for this.