Belfast Telegraph

Challenges ahead - bailout bosses

Ireland's bailout bosses have warned considerable challenges lay ahead for the country.

In their latest progress report, the European Commission, European Central Bank and International Monetary Fund said Ireland remains on track with its agreed recovery targets.

The troika also said market confidence had improved in policies being pushed through by the Fine Gael/Labour coalition which was helping to stabilise the country's standing in the international money markets.

However, the troika said there were still considerable challenges ahead with economic growth expected to be modest for the rest of the year.

Public spending minister Brendan Howlin said the Government had done a deal with the EC, ECB and IMF to use more money from the sale of state assets for job creation measures.

The exact amount has yet to be agreed, but it will be more than a third of the proceeds of the sell-off of parts of energy companies ESB and Bord Gais, he said. Plans to restructure Permanent TSB, so that it has a future as a stand-alone bank, have also been drawn up.

The proposals effectively involve splitting the lender into a "good bank", which will continue retail business for mainly "blue-collar" customers, and a "bad bank", which will deal with the institution's toxic loans. The move would ensure more competition alongside the two so-called pillar banks, Bank of Ireland and Allied Irish Bank.

Finance Minister Michael Noonan said a formal restructuring plan would go before the European Commission by the end of June. He said: "The objective of this plan is to create a viable retail bank focused on lending into the Irish economy. This will be achieved by carving out a viable bank from the current Permanent TSB business."

Mr Noonan also said Ireland will start going back to the international money markets this summer to help pay for the running of the country. But, as with all previous IMF rescue programmes, there would be have to a bit of "hand-holding" before the country could stand on its own again without the need for emergency financial funding, he added.

Taoiseach Enda Kenny said a shift in the agreement with the troika over how to use the proceeds of sold State assets would help the economy grow. He added: "I think as well that the conclusion of the discussions between the troika and both ministers now reflects the changed attitude that there is in Europe."

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