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Dublin: 0 °C Saturday 19 April, 2014

IMF approves latest €890 million loan – and warns against mini-Budget

The Washington-based fund affirms its stance that additional budgets during the year should be avoided.

Image: Itsuo Inouye/AP

THE IMF has approved the release of the latest batch of bailout funds to the Irish government, approving the transfer of €890 million to the government.

The release comes after the last quarterly inspection of Ireland’s performance, by a visiting Troika team in October, and brings Ireland’s total borrowings from the IMF to about €19.3 billion.

This represents about 85 per cent of the IMF’s total loan package for Ireland, which stands at about €22.8 billion.

Confirming the release, the Washington-based fund said Ireland’s “steadfast policy implementation has continued”, even as economic growth around the world had begun to slow down. even as growth has slowed in 2012.

In a commentary accompanying the release, the IMF recommended that the government avoid any pressure to introduce mini-budgets during the year, which it may otherwise feel pressured to do if economic growth in the Eurozone continues to flag.

“If next year’s growth were to disappoint, any additional fiscal consolidation should be deferred to 2015 to protect the recovery,” said the IMF’s acting chairman David Lipton.

Any disruption to a European recovery could pose a threat to Ireland’s economy, as it would take an impact on the spending power of other European economies and make it more difficult to sell Irish exports to European consumers.

The IMF’s policy is in line with previous comments where the fund has warned against any extra measures that could have a negative impact on the tentative Irish recovery.

The fund also again underlined its support for any European deal that could help to take the debts of Irish banks off the backs of the taxpayer, saying any such deal would improve Ireland’s ability to borrow money on the open market without the Troika’s assistance.

“By supporting medium term growth and debt reduction prospects, this would help avoid prolonged reliance on official financing,” Lipton said.

Read: Ireland’s cost of borrowing falls to lowest since April 2010

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