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Ireland To Exit Bailout Program

by Jason Gorringe,, London

19 November 2013

Ireland is to exit its bailout program next month, without a pre-arranged precautionary credit facility.

According to the Finance Department, this is the "best option" for Ireland. It says that market and sovereign conditions are favourable, with the country returning to the markets in 2012, and now holding over EUR20bn (USD26.9bn) in cash reserves. This should ensure that the Government is able to meet its commitments and funding costs until early 2015.

The Department also claims that the public finances are under control. It is targeting a deficit of 4.8 percent in 2014, in line with the 5.1 percent set by the European Union's (EU) Excessive Deficit Procedure. The deficit is expected to fall still further, hitting just 3 percent in 2015.

Commenting on Ireland's decision, the Eurogroup congratulated the Government on its successful implementation of the EU-International Monetary Fund (IMF) bailout program. A statement acknowledges that the "very good work done thus far in terms of fiscal consolidation and structural reforms are allowing Ireland to return to a path of sustainable growth and job creation, as evidenced by the nascent economic recovery, declining, though still high, unemployment, and improving business confidence."

The Eurogroup therefore "fully support[s] the Irish Government's decision to exit the program without requesting any successor financial assistance." It sees Ireland as "a living example that EU-IMF adjustment programs are successful provided there is a strong ownership and genuine commitment to reform."

European Commission Vice President Oli Rehn was also complimentary. He said: "While challenges remain, Ireland has made impressive progress and is well placed to make a successful and durable programme exit. Graduation from the program will send a very clear signal to markets and international lenders that the adjustment effort undertaken in Ireland, with the support of its European and international partners, has paid off. Ireland has accumulated significant cash buffers under the program, helped by the decision taken earlier this year by European creditors to extend the maturities on loans granted to Ireland."

The exit will formally take place on December 15.

TAGS: Finance | tax | business | European Commission | Ireland | fiscal policy | gross domestic product (GDP) | budget | International Monetary Fund (IMF) | agreements | unemployment | European Union (EU) | Europe

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