Brussels, 15/04/2011 (Agence Europe) - After their first quarterly assessment, the European Commission, the ECB and IMF have expressed satisfaction at Ireland's implementation of its structural adjustment programme introduced in return for financial aid of €67.5 billion. “The team's assessment is that the programme is on track, but challenges remain and steadfast policy implementation will be key”, said the organisations on Friday 15 April in a press release. They praise the full ownership by the new Irish government of the austerity programme negotiated by the previous government. This positive assessment paves the way for the payment of a new batch of cash, some €4.5bn (€2.9bn from the EU and €1.7bn from the IMF). On the same day, Moody's downgraded Ireland by two points (from Baa1 to Baa3).
The assessment focused on the various measures to bail out and rectify the Irish banking sector. Earlier this month, Ireland's central bank said that four Irish banks would require an extra €24bn (increasing the total public bailout to €70bn, a whopping 45% of GDP) (see EUROPE 10349). On the budget front, Ireland's creditors say that the targets set for the end of 2010 and March 2011 had been comfortably reached. In 2011, the Irish public deficit is expected to be slightly above 10%, the aim being to reduce it to 3% in 2015. After contracting by 1% in 2010, Ireland's economy is expected to grow again in 2011, but at a slower rate than forecast (0.5% rather than 0.9%). The government has cut the minimum wage by a euro, a move matched by changes to the industry wage-setting mechanisms. Liberalisation of protected professions, like the legal profession and pharmaceuticals, has also been introduced.
Irish Finance Minster Michael Noonan hoped that the talks on relaxing the strings attached to the Irish loan package would reach a conclusion at the same time as the talks on bailing out Portugal, in other words at the ECOFIN Council next month. (M.B./transl.fl)