Wednesday 7 December 2016

IMF praises our progress and clears €3.23bn bailout payment

Thomas Molloy and Sarah Collins in Brussels

Published 28/02/2012 | 05:00

The International Monetary Fund said it will make an immediate €3.23bn payment to the Government here following the Washington-based organisation's latest review of austerity measures.

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The new payment brings the IMF contribution to the bailout to €16.05bn

"The Irish authorities continue to advance wide-ranging reforms to restore the health of the financial system so it can support Ireland's recovery," the IMF said last night.

The announcement came as the German parliament voted overwhelmingly in favour of a separate bailout for Greece.

The IMF praised Irish progress in reducing the size of the banking sector and the high prices raised for some bank assets, but called for vigourous supervision of further downsizing. It also praised the Government's plans to help individuals cope with insolvency.

But the fund warned that Ireland still faces problems as the world economy slows.

"The challenges Ireland faces have intensified since the outset of the programme, with growth expected to ease to about 0.5pc in 2012 owing to a slowing in trading partner activity," IMF official David Lipton warned.

Other measures taken by the Government and welcomed by the IMF include job creation schemes and reform of wage agreements as well as last week's decision to sell State assets worth €3bn.

Meanwhile, Chancellor Angela Merkel managed to get a second Greek bailout approved in the German parliament yesterday without having to rely on the votes of opposition lawmakers, but she fell short of the wide majority needed for a convincing victory.

The motion passed easily, with 496 of the 591 members of the Bundestag (lower house) approving the €130bn Greek aid programme.

Negative

Despite the vote, credit rating agency Standard and Poor's (S&P) has lowered its outlook on the European Financial Stability Facility (EFSF), the eurozone bailout fund, to 'negative'.

S&P reaffirmed the EFSF's long-term AA+ rating, but the move to negative outlook from developing means it could cut the rating in the next two years.

The agency pointed partly to the reduced creditworthiness of some of the countries backing the fund.

S&P said it doubted it would see credit enhancements for the facility and said the negative outlook reflected similar outlooks of EFSF guarantors France and Austria. S&P cut both of those countries' top AAA status earlier this year.

Meanwhile, Tanaiste Eamon Gilmore, who was in Brussels for an EU foreign ministers' meeting, yesterday refused to rule out the possibility that the new pact -- which asks governments to introduce a legally-binding brake on spending and borrowing, and hands power to the EU's Court of Justice to police its implementation -- could be referred to the Supreme Court.

"Ultimately it may well be an issue that may have to be determined by the Irish courts," he said.

President Michael D Higgins alarmed cabinet ministers last week by saying that he may seek the advice of the Council of State if the bill raises "an issue of constitutional significance".

The Attorney General has yet to advise the Cabinet whether the treaty complies with Irish law.

Irish Independent

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