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Brendan Howlin, minister for public expenditure and reform and Michael Noonan, minister for finance, at a press conference in Dublin, July 14, 2011.
The EU-IMF troika said today that Ireland's
bailout program is on track and well financed.
In its third quarterly review, the EU-IMF-ECB
review team concluded that the Government had completed all 17 required actions
in the quarter to the end of June.
The troika said strong exports, aided by progress
in recovering lost competitiveness, are expected to continue driving the
recovery although domestic demand will continue to contract.
Minister for Finance Michael Noonan said at a press conference that the review
“was very much about seeing where we are in relation to the conditions of our
programme and its specified targets”.
“We have met the fiscal targets. We have met the banking targets. We have met
the structural reform targets,” he said.
Noonan said Ireland had shown that it “can and will meet demanding fiscal
targets”. He added that the EU-IMF programme provided a "clear path of
"At a political level, the willingness to meet the targets is underpinned by
the new government which has such a large parliamentary majority," he said.
Ajai Chopra, the mission chief, said the
IMF welcomed a statement earlier this week from Eurozone finance ministers that
they were ready to take further measures to deal with Europe's debt crisis.
He said that there should be "prompt implementation" of these measures,
adding that what was needed was a European solution to a European problem.
Staff teams from the European Commission
(EC), European Central Bank (ECB), and International Monetary Fund (IMF) visited
Dublin during July 6–14 for the regular quarterly review of the government’s
economic programme. The objectives of the programme are to address financial
sector weaknesses and to put Ireland’s economy on the path of sustainable
growth, sound public finances, and job creation, while protecting the poor and
The teams’ assessment is that the program
remains on track and is well financed. The authorities have continued
to steadfastly implement programme policies. Tensions in sovereign bond markets
have escalated during the visit, but programme financing is cushioning the
impact of this shock on the Irish economy and public finances. Continued strong
policy implementation will be important to limit potential contagion effects.
are consistent with a return to positive growth in 2011. Real GDP stabilized in
the year to the first quarter, and modest growth is expected in 2011. Strong
exports, aided by progress in recovering lost competitiveness, are expected to
continue driving the recovery although domestic demand will continue to
contract. Growth is expected to strengthen next year and beyond as the recovery
broadens and spills over into the labor market.
Reforms are being implemented to restore the
healthy functioning of the banking sector. Restructuring of
banks is ahead of schedule, with the merger of Allied Irish Banks with EBS
Building Society, and Anglo Irish Bank with INBS, already completed. Renewal of
the boards and management of banks is underway, and the recapitalization of
domestically owned banks is expected be completed by end July, with the fiscal
cost reduced by burdensharing with subordinated debt holders. Deleveraging of
banks is making progress, and will deliver a smaller more robust system while
avoiding fire sales.
On the fiscal front, the
cumulative deficit for the first six months of the year was well below the
programme ceiling. The budget deficit is projected to be below 10½% of GDP in
2011. The Government has established the Irish Fiscal Advisory Council to
provide an independent assessment of public finances. Later this year, the
authorities will publish a medium-term fiscal consolidation plan for 2012
to 2015, outlining the revenue and expenditure adjustment consistent with
reaching a deficit target of below 3% of GDP in 2015, drawing on the findings of
the ongoing Comprehensive Review of Expenditure.
The authorities are advancing targeted
structural reforms. To boost job creation, the Government is working
with the social partners to develop reform plans for sectoral wage agreements,
which cover sectors where unemployment tends to be high. The government also
plans to introduce legislative changes to remove restrictions on trade and
competition in sheltered sectors, including the legal profession, medical
services and the pharmacy profession, in order to lower costs and boost
The government’s program is supported by
loans from the European Union and EU member states amounting to €45.0bn and a
Extended Fund Facility with the IMF. Ireland’s contribution is
€17.5bn. Approval of the conclusion of this review will allow the disbursement
of €4.0bn in this quarter (€2.5bn by the EU, and €1.5bn by the IMF). Additional
resources in the order of €0.5bn are also scheduled to be disbursed under the UK
bilateral loan in the third quarter. The mission for the next program review is
scheduled for October 2011.