IRELAND HAS RECEIVED a positive assessment of its efforts to meet the terms of its bailout from the European Central Bank, International Monetary Fund and European Union today.
Following several days assessment, troika officials held a conference at the offices of the European Commission in Dublin to report on Ireland’s progress in meeting the terms of it bailout this afternoon.
European Commission Director of Economic and Financial Affairs, Istvan Szekely, said that Ireland’s credibility was “very high” and outlined the main findings of the review:
- The bailout programne is on track and well-financed
- Implementation of policy is steadfast
- Recent developments are in line with a return to positive growth
- Strong exports expected to continue, but domestic demand is expected to contact
- Financial reforms are on track – and in some cases ahead of targets
- The restructuring and recapitalisation of banks is on track
- Recent developments in line with modest growth
- Leveraging of banks making progress – but will be a long process
- The budget deficit is projected to be below 10.5 per cent of GDP in 2011
Szekely said that “no target was not met” by Ireland, however he pointed out that reforms scheduled for the next quarter would be “challenging”.
Quarterly reviews are part of Ireland’s bailout agreement. This review comes after a week of escalating fears that contagion could spread to Italy and Spain, and just days after the credit ratings agency Moody’s downgraded the country’s credit status to junk.
Addressing the issue of Ireland’s downgrade, the Deputy Director of the European Department of the IMF, Ajai Chopra, said: “We need to bear in mind that Moody’s decision is directly linked to Euro area stance”. He said that ratings agencies has “gotten it wrong” in the past and that it was entirely possible Moody’s was “overestimating risks”.
Chopra said that – if it were not for contagion risks – “significantly lower spreads” would be seen in Ireland, and added:
These problems are not just Irish. They are shared Euro problem. We need and what is lacking is European solution to a European problem.
Questioned on the issue of senior bondholders, Klaus Masuch from ECB said that there was “no change in the ECB’s stance”.
Speaking ahead of the lunchtime press conference, a confident Finance Minister Michael Noonan said that Ireland had met “all targets” set out in the bailout conditions: “We have met the fiscal targets. We have met the banking targets. We have met the structural reform targets. I am also pleased that the external partners have concluded that the Irish programme is on track and we are making good progress,” he said.
Noonan said that Ireland was making “good progress” but added that it was too early to know just how deep the upcoming budgetary cuts would need to be.