Noonan warns of bailout 'real test'
The real test for Ireland's economic recovery will be getting out of the bailout, finance minister Michael Noonan has warned.
As the troika's eighth review ended with confirmation that the Government has met all the latest conditions, Mr Noonan said a bank deal was key. More than 160 commitments have been fulfilled on time and 80% of the 85 billion euro ( £69 billion) funding has been drawn down, the review said.
"We are delivering on our commitments but the real test of Ireland's programme will be emerging from the programme, getting fully back into the markets and building a sustainable and long-lasting economic recovery," Mr Noonan said.
"However, many challenges remain, including the heavy burden of debt associated with the recapitalisation of the banking sector, and work is ongoing with the troika to reduce this burden in line with the June 29th Agreement."
The International Monetary Fund and European chiefs are due to give their assessment of Ireland's bailout performance. The overrun in the health budget has been singled out as the biggest issue for the Government.
Mr Noonan said he was confident Ireland would be able to exit the programme without needing a second bailout, but added a deal on the country's bank debt would be a major boost in ensuring Ireland was more sustainable in the eyes of the markets.
"We're well positioned at the moment to do that, but the markets looking at us will be trying to decide that even though we're fully sustainable now, we are sustainable in all eventualities in the future," said Mr Noonan. "There is no doubt that a deal on the debt or two deals on different parts of the debt would make Ireland more sustainable."
He said that was the commitment made by the 27 heads of state in Europe on June 29, and the Government would press hard in negotiating that. In a statement, the review team from the European Commission, European Central Bank, and the International Monetary Fund said that creating jobs should be top of the agenda.
"Unemployment remains unacceptably high, especially among the youth, making job creation and growth a key priority," they said. "Engagement with the long-term unemployed should be a priority, including through timely and well designed involvement of the private sector in providing employment services."
The troika expects economic growth of 0.5% this year and 1% next year. On the health budget, the review team said: "The authorities are alert to the health sector overruns and are determined to meet the programme target for a budget deficit below 7.5% of GDP in 2013."