THE INTERNATIONAL MONETARY Fund (IMF) has released a €1.4 billion loan instalment to Ireland after the country successfully completed its latest bailout review, the sixth so far.
As part of the country’s agreement with the Troika of the IMF, European Central Bank and European Commission, about €23.5 billion of the €85 billion bailout programme is coming from the IMF under what’s known as the Extended Fund Facility (EFF).
In announcing the release of the latest tranche of loans, the IMF said that the implementation of the bailout programme “continued to be steadfast and ownership of the program remains strong despite the considerable challenges the country is facing”.
However, the IMF did note that financial tensions in the euro area have “resurfaced” leading to a rise in the cost of Irish sovereign bonds in recent months.
It also noted that slowing growth in trading partners means that Ireland’s export-led recovery is expected to dampen somewhat with real gross domestic product (GDP) projected to expand by 0.5 per cent this year, down from 0.7 per cent last year.
“At the same time, Ireland’s progress in strengthening the financial system is reflected in the stability of overall level of deposits in the banking system,” the IMF added also noting fiscal consolidation last year, and financial sector and structural reforms that have been implemented.
David Lipton, the deputy managing director and acting chair of the executive board of the IMF, said that Ireland had met all programme targets at the halfway point in the bailout, praising Irish authorities “steadfast policy implementation”.
In a comment that many will see as timely given the controversy surrounding a withdrawn ESRI working paper which claimed that as many as 44 per cent of people with children would be better off on the dole than in work, Litpon said “care should be taken to avoid unemployment traps in the social payments structure”.
He also said that the implementation of personal insolvency legislation is needed for households, adding: “Early preparation of the new personal insolvency framework is needed to address household debt distress while protecting debt service discipline.”
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