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IMF signs off on latest €3.2 billion loan to Ireland

The IMF signs off on the fifth review of its bailout, and is releasing €3.2 billion to Ireland – bringing its total IMF debt to €16bn.

The IMF is opening its vaults to give Ireland another €3.2 billion of bailout loans.
The IMF is opening its vaults to give Ireland another €3.2 billion of bailout loans.
Image: bsabarnowl via Flickr

THE INTERNATIONAL MONETARY FUND has confirmed it will release the next batch of bailout loans to Ireland – releasing €3.2 billion to the Irish government.

The decision comes after the successful completion of the fifth quarterly review, with the IMF’s Craig Beaumont having led the Washington delegation to Ireland for last month’s inspection of Ireland’s progress.

The latest €3.2 billion advance means Ireland will have drawn down a total of €16.05 billion from the IMF, out of a total of slightly over €22.6 billion.

In a statement, the IMF said Ireland had undergone “wide-ranging reforms to restore the health of the financial system so it can support Ireland’s recovery”.

“Major progress in downsizing the banking system has been made, with the two largest banks disposing of almost €15 billion in mainly foreign assets in 2011 at better prices than anticipated,” the IMF said.

The Fund also pointed to the recently-published legislation reforming the personal insolvency system, commending the possibility of out-of-court settlements for mortgages and other secured debt, and the proposed sale of state assets to raise €3 billion.

Last year’s Budget deficit stood at 10 per cent of GDP, it said, well within the target of 10.6 per cent despite the sluggish economic growth from last year.

The IMF’s David Lipton said Ireland also faced significant challenges in the coming period, with economic growth likely to sag this year as a European downturn impacts on Irish exports.

“Continued strong implementation of fiscal consolidation, and financial and structural reforms by the Irish authorities will be critical for the government to regain timely and substantial access to market funding,” Lipton said.

“Continued strong European support remains essential to the effectiveness of the authorities’ efforts.”

Legislation currently going through the Seanad, having already cleared the Dáil, will see Ireland increase its contributions toward the IMF, which in turn will allow it to benefit from a cheaper interest rate on future IMF borrowing.

Read: Moody’s backs ‘credit positive’ sale of state assets

More: Latest memorandum reveals more austerity ahead in Budget 2013

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Gavan Reilly

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