IMF: Over 25pc of Irish bank loans bad, modest economic growth
JUST over a quarter of loans in Irish banks have gone bad with losses persisting, the International Monetary Fund has said.
The Washington-based body warned this was hindering new lending.
Completing its tenth review under the bailout programme, the IMF said economic recovery is not yet well established with risks to debt sustainability remaining.
David Lipton, IMF deputy managing director, said that two and a half years into the programme, the authorities continue steadfast implementation.
“Improved market sentiment and the recently approved extension of EFSF/EFSM loan maturities have been reflected in a decline of bond yields,” Mr Lipton said.
“Yet economic recovery is not well established and risks to debt sustainability remain.
“Strong policy implementation and timely delivery on European pledges to enhance program sustainability remain key.”
The IMF said that the economy grew modestly for a second year in 2012 and that “positive signs” are emerging, pointing out that employment rose just over 1pc year-on-year in the first quarter of 2013, though the rate of employment remains high at 13.7pc.
“In the banking sector, just over 25pc of loans are nonperforming and losses persist, hindering new lending,” the review states.
“Addressing these issues is the focus of the authorities’ preparations for entry into European banking union ahead of the European stress test exercise next year.”