Share

Ireland on verge of bailout exit

Dublin - Ireland took a major step towards becoming the first eurozone country to exit a huge financial bailout programme on Thursday after the EU and IMF completed their final review.

"This is a significant day, that many thought, and some feared, would never be reached," Finance Minister Michael Noonan and Expenditure Minister Brendan Howlin said in a joint statement.

Ireland was rescued with the help of €85bn ($115bn) from the International Monetary Fund and European Union in late 2010.

The bailout exit, due on December 15, will result in Ireland fully returning to the international lending markets and an increased level of independance in economic decisions after accepting stringent measures in exchange for the emergency funding.

The European Commission, the IMF and the European Central Bank - the so-called troika of lenders - insisted on tax rises, structural reforms and the sale of state assets in exchange for the bailout after Ireland was overwhelmed by huge national debts caused by a banking crisis and property market collapse.

Last month, Irish Prime Minister Enda Kenny announced Ireland would exit its bailout in mid-December, becoming the first of four bailed-out eurozone countries to do so.

Ireland's economy crashed in 2008 after a decade of almost double-digit growth fuelled by a cheap credit and a booming construction and property sector in what became known as the "Celtic Tiger".

"Having been frozen out of the financial markets three years ago, we have now successfully laid the foundations for exiting the EU/IMF programme on December 15 of this year and for making a full return to the markets," Noonan and Howlin said on Thursday.

Other eurozone countries to have been rescued are Greece which was the first, Portugal and Cyprus.

The EU has long-hailed Ireland as the "star pupil" of the bailed-out countries.

Ireland made a partial return to the markets last March, raising €5.0bn in their first ten year government bond since before the bailout.

Falling unemployment figures and a modest return to growth, 0.4% in the second quarter, are used by the EU and Dublin as indicators that austerity is working.

After coming to power in a general election called in the months following the bailout, Kenny's coalition government continued to implement the stringent austerity measures required under the terms of the programme.

Unsurprisingly, the deficit has fallen considerably from pre-bailout levels with Dublin estimating its deficit will be 4.8% of gross domestic product (GDP) in 2014 and 2.9% in 2015.

Dublin pumped billions into its banking sector when house prices collapsed in what is one of the world's worst property crashes.

According to the latest Central Statistic Office figures, property prices remain 48% lower than their 2007 peak.

Dublin must now decide if a precautionary credit line, or insurance fund, is needed in case market conditions become unfavourable once it exits the bailout safety net.

However with yields on Irish bonds now around 3.5%, almost five times lower than their 2011 peak, Dublin may decide to go it alone because of the possible domestic political fallout that may result should it accept further tough conditions in return for the fund.


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.02
-0.6%
Rand - Pound
24.00
-0.4%
Rand - Euro
20.52
-0.3%
Rand - Aus dollar
12.35
+0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.40
+0.4%
Palladium
998.40
-0.3%
Gold
2,212.97
+0.8%
Silver
24.70
+0.2%
Brent Crude
86.09
-0.2%
Top 40
68,068
+0.6%
All Share
74,264
+0.5%
Resource 10
56,909
+2.2%
Industrial 25
103,553
+0.3%
Financial 15
16,463
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders