IMF loans further 3.2 billion euro
More than 3.2 billion euro in loans is being released to Ireland following a review of the bailout by the International Monetary Fund (IMF).
The latest release of funds followed a fifth review of the nation's performance and brings the IMF's loans up to 16 billion euro over three years.
Acting IMF chairman David Lipton said Irish authorities have continued strong implementation of their programme despite deteriorating external conditions. They also met 2011 fiscal targets with a margin and advanced structural reforms to support growth and job creation, he said.
He added: "The Irish authorities have responded by raising the fiscal consolidation effort adopted in Budget 2012, and the budget remains on track to meet an unchanged general government deficit target of 8.6% of GDP. If growth should weaken further, the automatic stabilisers should be allowed to operate to help avoid jeopardising the fragile recovery."
The IMF programme was approved in December 2010 as part of a larger 85 billion euro bailout, supported by the European Financial Stabilisation Mechanism, the European Financial Stability Facility, loans from Britain, Sweden and Denmark and Ireland's own contributions.
The IMF said authorities had continued to advance wide-ranging reforms to restore the health of the financial system so it can support Ireland's recovery. Major progress in downsizing the banking system has been made, with the two largest banks disposing of almost 15 billion euro in mainly foreign assets in 2011 at better prices than anticipated.
Steps to support growth and job creation are being put in place, reforms of sectoral wage agreements have been submitted to parliament, and a comprehensive strategy for personal insolvency reform has been announced, including an out-of-court debt settlement mechanism which would cover mortgages and other secured debts, it added.
Mr Lipton, also first deputy managing director, said: "After three years of contraction, Ireland's growth is estimated at almost 1% in 2011, with exports leading the current account into surplus. Ireland's bond spreads have declined significantly in recent months, although they remain relatively high.
"At the same time, the challenges Ireland faces have intensified since the outset of the programme, with growth expected to ease to about 0.5% in 2012 owing to a slowing in trading partner activity."
He said that to support a renewal of sound lending and domestic demand recovery, financial sector reforms must continue to rebuild long-term viability of the banks and improve the quality of their balance sheets.