Brussels, 21/10/2011 (Agence Europe) - Ireland has met its budget commitments (set out in its structural adjustment programme) and its budget deficit is expected to reach 10.5% of GDP. It achieved this due to stronger than expected economic growth in the first half of the year. The first stages of financial sector reform have been implemented and new structural reforms are under way, but the economic slowdown in Ireland's main trading partners and the faster than forecast shrink in domestic demand means that growth forecasts of GDP have been reduced to 1% in 2011 and 2012. This situation partly explains the gap in interest rates on Irish and German bonds.
These are the main findings of the quarterly fact-finding mission by Ireland's creditors, the European Commission, the ECB and the IMF.
The fact-finders said that the Irish government was firmly committed to budget reform and reducing the deficit to below 3% of GDP in 2013 and to no more than 8.6% in 2012. Further savings may come in the form of improvements in the budget consolidation plan over the next few weeks. The fact-finders said that because the bailing out of the banks cost less than expected, Irish banks are now clearing their debt in a satisfactory manner.
The Irish finance minister, Michael Noonan, said he was happy that the fact-finders had found that the programme was on the right track and Ireland was making substantial progress in all domains.
The fact-finders' findings will be examined by the Council of the EU and the IMF and if approved, the EU and IMF will give the go-ahead for the payment of the next instalment of aid to Ireland, some €8 billion (€3.8bn from the IMF and €4.2bn from the EU). (DD/transl.fl)