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Full text of statement by ECB/IMF/EU on review of Ireland's Bailout - April 15, 2011
The following is the full text of the statement by the ECB/IMF/EU team on completing their review of Ireland's Bailout. The statement was issued on April 15, 2011.
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) visited Dublin during April 5-15 for the first quarterly review of the government’s economic program. The objectives of the program are to address financial sector weaknesses and to put Ireland’s economy on the path of sustainable growth, sound public finances, and job creation. Maintaining social fairness in shouldering the burden of adjustment is one of the program priorities.
The teams’ assessment is that the program is on track but challenges remain and steadfast policy implementation will be key.
Ireland is making good progress in overcoming the worst economic crisis in its recent history. Program implementation has been determined, despite the period of political change and a uncertain external environment. The new government, through its Programme for Government and its decisive approach to banking sector reforms, has taken full ownership of the goals and key elements of the EU-IMF-supported program.
The macroeconomic outlook for 2011 is for growth to resume. After contracting by 1 percent in 2010, real GDP is expected to grow in 2011, albeit more slowly than previously forecast. Strong exports lead the expansion, supported by improved competitiveness and world trade growth. Domestic demand will continue to contract, although at a slower pace. Core inflation is forecast to remain subdued but rising energy and food prices are increasing headline inflation.
In the banking sector, the comprehensive recapitalization and reforms announced on March 31 are a major step towards restoring the Irish banking system to health. The credibility of the exercise has been reflected in positive market reaction, with the Irish bond yields declining following the announcement. The review mission discussions focused on the priorities for implementing these reforms, including reorganizing and deleveraging the banking system, and strengthening its capital base. These steps are crucial for enabling the banking system to become a driver of economic recovery.