Brussels, 3/07/2012 (Agence Europe) - On Thursday 12 July 2012, the troika of lenders (the European Commission, the IMF and the ECB) hailed Dublin's work to deal with its finances, “which remains on track despite challenging macroeconomic conditions”. During the seventh examination of implementation of Ireland's structural adjustment programme, however, an examination carried out between 3 and 12 July (see EUROPE 10652), the lenders found that much still needs to be done to restore financial autonomy.
The troika says that “growth prospects for the remainder of 2012 and into 2013 remain modest, with weak trading partner growth dampening export demand despite further competitiveness gains. Ireland's unemployment remains very high and generating growth and jobs on a sustainable basis remains a critical priority. Accordingly, the authorities are considering plans to utilise the enhanced European Investment Bnk resources in a range of sectors, including education, transport and healthcare”.
Dublin has the biggest budget deficit in the eurozone and is therefore asked to keep a close eye on public spending, including for healthcare. The deficit reduction targets were met in the first half of 2012 and remain well on track to achieve the 8.6% GDP target for the year.
The troika is pleased that the country was able to roll over its short-term debt unaided on 5 July 2012 (see EUROPE 10650), a sign that Ireland is regaining investor confidence. In an interview with the Financial Times on Thursday 12 July 2012, the Irish finance minister, Michael Noonan, said that his country would attempt to roll over long-term debt in March 2013 with the emission of ten-year bonds.
The positive outlook may allow an easing of the conditions imposed on Dublin by its lenders. Upon arrival at the Eurogroup meeting on Monday 9 July (see EUROPE 10652), Noonan said he wanted to negotiate a breathing space. The troika comments that talks are ongoing to “improve the adjustment programme's viability”. At the Eurogroup meeting, Commissioner Olli Rehn said that proposals would be submitted to the eurozone finance ministers in September to this effect, with a view to agreement being reached in October. (EL/transl.fl).