PARIS (MNI) – Ireland is “well on track” to meeting the targets of
its bailout program and is expected to return to positive economic
growth this year, the European Commission said.

Reporting on the results of a visit by the troika — the
Commission, the European Central Bank and the International Monetary
Fund — to Dublin in July, the Commission said Ireland has made
“important progress” in reducing its deficit and in strengthening its
banking system.

“Review results show a gradual return to positive growth in 2011.
Strong exports – aided by improvement of competitiveness – drive the
recovery,” the Commission said in a statement.

The Commission’s assessment echoed an equally favorable report on
Ireland from the IMF earlier this week. The Commission said a third
installment of Ireland’s bailout, for E5.5 billion, will be disbursed in
two tranches by end of September and the end of October.

The report called Ireland’s fiscal performance “satisfactory” and
said the country’s deficit would be “well below” the 10.5% of GDP target
required for this year.

Ireland received an E85 billion bailout last year after problem’s
in its banking system, followed by a government decision to guarantee
private bank debt, prompted a loss of confidence that caused Irish
government bond yields to soar.

The commission said Irish banks have been strengthened through
recaptalizations and mergers.

“The determination of the government to fully implement the program
and the July 21 announcements, have enabled a noticeable reduction of
yields on Irish sovereign bonds on the secondary markets in recent
weeks,” the Commission report said.

Irish 10-year bond yields were at 8.71% at midday Friday. That
compares with a recent peak of over 14% just prior to the July 21 summit
in Brussels.

The Commission said it welcomed Ireland’s plans to publish a
medium-term fiscal consolidation plan for 2012 to 2015 outlining how it
intends to cut its budget deficit to below 3 percent of GDP in 2015.

–Paris newsroom +331 4271 5540; jduffy@marketnews.com

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