‘Successful’ – That was the word used by Minister for Finance Michael Noonan to describe the most recent review of Ireland’s EU-IMF bailout. And, according to the country’s debt inspectors, Ireland has certainly had some success in attempting to wean itself off the 67.5 billion euro bailout. On Thursday it was announced that the Emerald Isle is ahead of its debt slashing schedule, aided by the country’s gross domestic product growth in 2011 to 158 billion Euros.
The joint statement released by the Troika emphasised the ‘strong’ commitment demonstrated by the Irish Government over the past two years in reducing spending despite ‘a challenging environment.’ There are now hopes that a grand refinancing deal involving the future European Stability Mechanism could allow a significant amount of Ireland’s debt to be transformed into mutualized European debts, which would be repayable over a longer period.
Despite this good news, at yesterday’s press conference Noonan still cautioned that the ability of Ireland to return to the debt markets would be the real test. The Finance Minister asserted the opinion that the Government now had to make a concerted effort to stimulate Irish economic growth, balance the budget and reduce the still significant burden of debt.
Noonan stated that: ‘If you look at the programme in terms of fulfilling all the commitments that we talk about – as I said, we’ve fulfilled 120 of them – then it’s a very successful programme. But the real test of success is getting back into the markets […] We need a more sustainable debt position and we need to continue in driving the deficit lower, to ensure that we’ll get fully funded in the market at reasonable rates at the back end of next year’.
Monday saw euro-zone finance ministers agreeing, in principle, to retrospectively emulate in Ireland the banking sector aid measures agreed for Spain. Noonan stated that without a significant decline in the country’s debt burden the economy would be unable to yield the results expected. However, he did add that the Irish Government’s request for a reduction in their 64 billion euro bank debt was ‘ambitious’.
It must be remembered that in 2010 Ireland was in a cataclysmic position, overwhelmed by Europe’s most toxic bank debts. They are now on a course which could eventually lead to independence from European and IMF lenders. This news may bring some much needed hope to other struggling members of the Euro-zone.