The Deputy Governor of the Central Bank has said a small adverse shock to market confidence in the Irish Sovereign could complicate the exit from the EU-IMF programme at the end of this year.

Speaking in Berlin, Stefan Gerlach called for a number of actions to reduce the sovereign-bank link that "would improve debt sustainability and could greatly enhance Irish prospects of exiting the programme on schedule".

He said: "To facilitate a smooth exit from the programme, it is important that financial market concerns about the future debt service burden of the Irish Sovereign are allayed.

"Continued sound implementation of the programme is crucial, while developments at the European level can also be helpful."

One of the measures he specified was greater certainty on the use of the permanent bailout mechanism, the ESM, to retrospectively apply to banking-related public debt.

The potential future use of the ESM to recapitalise banks following the establishment of a banking union had been discussed at the June EU summit.

"For Ireland, greater certainty on this issue could provide support for successfully exiting the programme in 2013," Mr Gerlach said.

He also said an agreement that would result in a more favourable time profile of payments of the Anglo promissory notes would improve the Government's fiscal position and greatly enhance its ability to regain full access to the markets.