Brussels, 19/01/2012 (Agence Europe) - Good news for the eurozone at last - Ireland is implementing its structural adjustment plan successfully and generating the desired effects for its international lenders, while the talks on the second Greek bailout are getting closer to the bone (see related article) and Portugal's economy is not yet picking up. Representatives of the troika of lenders (the European Commission, the ECB and the IMF) were in Dublin from 10-19 January on a fact-finding mission and issued a joint press release on Thursday saying that the Irish programme was on track, but huge challenges remain. It is expected that the Eurogroup meeting on Monday 23 January will decide on the basis of the troika's report to authorise the next instalment of aid for Ireland (close to €10 billion, €6.5bn of it from the European Union).
In 2011, Ireland substantially cut its deficit to below 10% of GDP, well below the 10.6% target, largely by slashing public spending. “This consolidation was achieved in tandem with returning the economy to growth after three years of contraction”, explained Irish Finance Minister Michael Noonan on Thursday, expecting the country's deficit to fall to 8.6% in 2012.
The Irish banking system is unrecognisable, now taking the form of two key banks. Noonan commented: “The most significant of these (Ed: successes) was the achievement of the deleveraging targets with total deleveraging across government supported banks of €40.5 billion to end-November as compared to a 2011 target of €34.7 billion.” He hoped that the recapitalisation of Irish Life Permanent would be complete by June 2012. The troika approves of the industry-wide collective agreements to introduce flexibility into pay deals.
Future challenges. The troika says Ireland still faces huge challenges, with growth forecasts reduced from 1% to 0.5% this year. Due to the collapse of the property bubble, the Irish government is negotiating new insolvency rules with the banks for private individuals. The troika says these measures will need to be tougher to encourage a return to work because unemployment remains high. (MB/transl.fl)