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Kind words from IMF as new bailout loans are approved

Ireland’s about to go €7.5bn further into the red – but the IMF insists that there’s cause for optimism as it approves new loans.

The IMF has complemented the Irish government on its handling of the economy, as it approved the latest €1.5bn of bailout loans.
The IMF has complemented the Irish government on its handling of the economy, as it approved the latest €1.5bn of bailout loans.
Image: Jose Luis Magana/AP

THE IMF HAS confirmed the release of almost €1.5bn of new bailout funding, with some positive analysis of the shape of Ireland’s economic recovery.

In a statement published last night, marking the end of the third review of the bailout programme, the IMF acknowledged the government’s progress in implementing austerity measures in Ireland, and its work to reform the banking sector.

“The Irish authorities adopted a comprehensive strategy in March to reorganise and deleverage the domestic banks, and to strengthen their capital base,” the IMF said, adding that the reform of the financial system was “ahead of schedule in some areas”.

These actions are helping to restore confidence as part of the government’s strategy to put the economy on a path of sustainable growth, sound public finances, and job creation.

Recent indicators are consistent with a return to positive growth in 2011.

The acting chairman of the IMF’s executive board, Naoyuki Shinohara, added that continued progress of reforms under the bailout programme were essential to support the recovery and rebuild confidence in the country’s economy.

The announcement came after the EU Council authorised the release of €5.5bn in bailout funds of its own, which will be paid in two instalments over the next two months.

The EU’s statement also confirmed that, for the first time, Ireland would be making use of its bilateral loan facility with the UK – borrowing €500m from its neighbour and largest trading partner.

The latest loans from the EU will bring Ireland’s total bailout borrowings from Europe to €9.1bn, while the total borrowings from the IMF will now stand at just under €8.7bn.

Combined, Ireland will have drawn down €16.3bn of the €67.5bn set aside for it from emergency funding sources under the various bailout programmes.

The IMF’s statement also confirmed previous reports that the Irish government would publish a “medium-term fiscal consolidation plan for 2012 to 2015″ later this year, outlining the structure of the next four annual budgets.

Read: Government should cut €4 billion in December budget, says ESRI >

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Gavan Reilly

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