Ireland’s bailout programme is on track but significant challenges remain as external growth slows, domestic demand remains weak and unemployment high, troika representatives said today.
The troika said the Ireland's policy implementation remains on track and reforms are underway to reform the banking system.
In a conference call this afternoon the IMF said it was involved in technical work on financial sector reforms which would address bank debt taken on by the sovereign and tackle under performing loan portfolios of the banks, including tracker mortgages.
“If implemented this support would facilitate recovery in domestic demand and would also facilitate Ireland regaining access to market funding,” the IMF’s mission lead to Ireland Craig Beaumont said.
However, Ireland’s planned return to the markets faces significant headwinds, with the troika predicting only modest economic growth for 2012 and for Ireland's borrowing costs to remain high.
The EU said market confidence in the Government's policies had improved but the IMF warned if growth remained sluggish, the debt ratio could move higher in the medium term.
Minister for Finance Michael Noonan today said Ireland could gradually return to the bond markets, potentially starting this summer.
“There is no firm timetable. The work involves potential further restructuring of bank balance sheets which is inherently complex and there’s also the matter of significant coordination required,” Mr Beaumont said.
“Obviously we’d like to move it reasonably quickly, but we don’t have a fixed timetable.”
Mr Beaumont refused to comment on the ECB’s position regarding Ireland sticking to its commitments on promissory notes used to fund Anglo Irish Bank and Irish Nationwide.
“We’re looking at an overall solution that would enhance Ireland’s ability to regain market access which is a key objective of the programme, and the promissory notes are part of that work,” he said.
Approval of the review will allow the IMF to disburse €1.4 billion in funding to Ireland, while the EU will contribute €2.3 billion.
Troika representatives arrived in Dublin on April 17th for the sixth quarterly review of the EU-IMF bailout programme. The programme is due to end in December 2013.
