Belfast Telegraph

Outlook is gloomy for Dublin to hit targets

By Oliver Wright

The Republic will not achieve the 3% of gross domestic product deficit target by 2015 while growth will slow further in 2012, according to a new report from Dublin's Goodbody Stockbrokers.

Goodbody chief economist Dermot O'Leary also said Ireland's first year in the EU/IMF/ECB programme provided mixed results.

But he believes that while the country moved to modest growth last year, the economy remained fragile with recovery "totally dependent on net exports".

He also expects that the debt/GDP ratio will rise to 124% in 2014 and has revised down GDP growth estimates to 0.7% for this year from 1.2% while GNP, excluding multinationals, will fall by 0.8% and domestic demand by 2.6%.

His comments came as officials from the EU/IMF/ECB, headed up by the IMF's Ajai Chopra, have begun their fifth review of the €67.5bn (£55bn) loan programme.

"The fifth review of Ireland's programme, starting today, must focus on the issue of growth and debt sustainability, rather than just austerity," he said.

"A restructuring of the €30bn (£24bn) in promissory notes (in relation to Anglo) provides an opportunity to reduce debt to a more sustainable level without the difficulties that Greece is currently experiencing with private sector involvement.

"Another important issue is the speed at which the banking system is deleveraging."

The troika will review figures for last year and establish targets for the Government and the economy over the coming months.

Both Spain and Italy are due to hold bond auctions this week as they struggle to raise funds in the open markets.

The cost of borrowing for Italy remains above 7% - a level that is considered to be unsustainable by economists.

But the current EU bailout fund is not big enough to save that country because of its size.

Taoiseach Enda Kenny will meet British Prime Minister David Cameron in Downing Street on Thursday to discuss the ongoing debt crisis.

He added that it is "absolutely fundamental" that the Republic's nearest neighbour remains an active and core member of the EU in spite of the fact that Britain is not part of the fiscal compact currently subject to intense talks.