We're ready to leave the bailout, says upbeat Noonan
IRELAND will leave the bailout programme next year, even if we don't get a deal on bank debt, an upbeat Finance Minister Michael Noonan has forecast.
At the end of a 10-day inspection by the EU-IMF bailout team -- the so-called troika -- both Mr Noonan, left, and the EU-IMF said the economy is on track to hit targets for this year.
This means the December Budget -- including tax hikes and spending cuts worth €3.5bn -- won't have to be any harsher than previously planned.
The real test for our economic recovery will be getting out of the bailout, Mr Noonan said.
He said the European Commission will draw up a plan before Christmas on how the State can leave the bailout on target. "We are at the stage now where we are just taking the first steps for leaving the programme," Mr Noonan said.
He added Ireland may need some "hand holding" as we leave the programme. "It's not a case of one bound and you're free."
Mr Noonan said a deal on the country's bank debt, the subject of intense wrangling in Europe at the moment, would be a major boost in ensuring Ireland was more sustainable in the eyes of the markets.
"There is no doubt that a deal on the debt or two deals on different parts of the debt would make Ireland more sustainable," he said.
The Government wants to return to the bond markets to borrow in the same way that most other countries borrow.
Mr Noonan said we would have to borrow as much as €17bn on the bond markets to create a safety net before exiting the programme.
That would give a cushion that would last 18 months if further financial shocks prevented us from borrowing.
Borrowing would be much cheaper if Ireland secured a deal on the bank debt burden.
The troika said separately that the Government was on track to meet budgetary targets, but questioned whether the country could exit the bailout without a deal.
Mr Noonan added that the Government would like to go back to the markets for borrowing at a rate similar to that offered by the EU-IMF. The present cost of borrowing from the troika is between 3pc and 3.5pc.
"To be back in the markets fully, the kind of rate of interest we need would be around there," Mr Noonan said.
There was a different focus later in the day when the IMF discussed the Government's plans. Craig Beaumont, who heads the IMF mission in Ireland, said that he had not held any talks with the Government about exiting the bailout.
He added that the IMF remained focused on December's Budget and structural reforms.
The IMF official said a deal on Ireland's debt would "greatly enhance" the nation's chances of exiting the programme and warned any failure to deliver on a deal risks leaving Ireland reliant on official financing.
"Delivering on European commitments, especially on direct bank recapitalisation, is critical to ensure that Ireland can continue to ensure Ireland can deepen its access to markets," Mr Beaumont said.
"Disappointing market expectations could risk Ireland needing ongoing reliance on official financing. That would miss an opportunity for a much-needed success in Europe."
Turning to the broader economy, Mr Noonan said the Government would be downgrading its growth forecast for next year.
"It looks at present there will be a marginal marking down of the growth forecast -- not for 2012 but for 2013," he said.
The IMF said yesterday that it had cut Ireland's growth forecast for 2013 to 1.1pc from 1.4pc. That downgrade comes just a month after the IMF slashed its forecast for 2013 from 1.9pc.
Mr Noonan also said the number of homeowners getting into mortgage difficulty was tailing off. "It is quite clear now we are coming close to the point where we can quantify the number of people with impaired mortgages," he added.
The troika raised concerns about personal and household debt. "Intensified efforts are required to deal decisively with mortgage arrears and... reduce bank operating costs," it said.