PARIS (MNI) – The European Commission, European Central Bank and
International Monetary Fund (the Troika) released the following
statement following their quarterly review of Ireland’s compliance with
the terms of its rescue loan package:

“Staff teams from the European Commission, the European Central
Bank (ECB), and International Monetary Fund (IMF) visited Dublin for the
regular quarterly review of the government’s economic programme from 17
to 26 April 2012. Ireland’s policy implementation remains on track,
nonetheless considerable challenges remain. Ensuring a recovery in
Ireland’s highly open economy will require that these policy efforts
continue, and that the external environment improves.

The European Commission and IMF missions will seek approval for the
completion of this review from the relevant EU bodies and the IMF
Executive Board respectively. Ireland’s programme implementation
continues to be strong. Fiscal targets for 2011 were met with a healthy
margin, and the consolidation remained on track in the first quarter of
2012. The authorities have also pressed ahead with comprehensive reforms
to restore the health of the Irish financial sector. Market confidence
in Ireland’s policies has improved, contributing to some stabilisation
in Irish bond spreads, although they remain elevated. The government is
advancing its jobs and growth agenda.

In recognition of the more challenging external environment, the
authorities are establishing a working group to review and adapt their
strategy for growth and job creation by enhancing the economy’s
competitiveness and flexibility further while safeguarding social
cohesion. The authorities’ approach to labour activation is outlined in
the recently published “Pathways to Work” strategy, while the Action
Plan for Jobs sets out measures to facilitate job creation.

Progress in this area is essential to bring down the high level of
unemployment. Fiscal consolidation efforts remain on track in 2012. The
2011 general government deficit (excluding bank support costs) is now
estimated at 9.4% of GDP, well within the programme ceiling of 10.6%.
The targets for end-March 2012 on the Exchequer primary balance and net
debt were also met, reflecting the authorities’ prudent budget design
and implementation. The budget is on track for achieving the 2012
deficit ceiling of 8.6% of GDP.

Ongoing work to restore the health of the Irish financial system is
critical for enabling a recovery of domestic demand. Efforts to
strengthen the quality of bank assets are intensifying through
strategies for dealing with mortgage and small and medium-sized
enterprises’ loan arrears. The personal insolvency reform will further
facilitate the resolution of unsustainable debts, with the authorities
taking care to balance the rights of debtors and creditors, and to
uphold Ireland’s tradition of debt servicing discipline. Finally,
Permanent TSB is moving ahead with completing its restructuring plan.
Nonetheless, considerable challenges remain. Economic growth is expected
to remain modest in 2012, at around 0.5%. The benefits of continued
gains in competitiveness are limited by relatively low trading partner
growth, while domestic demand continues to decline and the banking
sector faces difficult market funding conditions.

Technical work on further financial sector reforms to support
prospects both for a recovery of domestic demand and for Ireland
regaining market access continues. Overall, strong policy efforts by the
Irish authorities, together with the support of Ireland’s partners, will
be needed to achieve the goals of the programme in these challenging
circumstances. The objectives of Ireland’s European Union and
IMF-supported programme are to address financial sector weaknesses and
to put Ireland’s economy on the path of sustainable growth, sound public
finances, and job creation, while protecting the poor and most
vulnerable.

The programme includes loans from the European Union and EU Member
States amounting to E45.0 billion, and a E22.5 billion Extended Fund
Facility with the IMF. Ireland’s contribution is E17.5 billion. Approval
of the conclusion of this review is scheduled to make available a
disbursement of E1.4 billion by the IMF, and E2.3 billion by the EU. The
mission for the next programme review is scheduled for July 2012.”

–Paris newsroom, +331-42-71-55-40; paris@marketnews.com

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