Bloomberg News

IMF Says Irish Progress With Bank Reforms, Approves Payment

September 02, 2011

(Updates with further quote from IMF statement in eighth paragraph.)

Sept. 2 (Bloomberg) -- The International Monetary Fund said Ireland is ahead of schedule on legal restructuring of banks, as the fund approved a 1.48 billion-euro ($2.1 billion) disbursement to the country under the international rescue plan.

“The authorities are pushing forward financial sector reforms which are at the heart of Ireland’s response to the crisis,” the IMF said in a statement released in Washington today. “Bank recapitalization has been completed with welcome private investor participation. Legal restructuring of banks is ahead of schedule and their boards and management teams are being renewed.”

In addition to the IMF disbursement, Ireland is set to receive up to 2.5 billion euros in European aid by the end of September and up to 3 billion euros in October, the European Union said in an e-mailed statement in Brussels earlier today. A disbursement of 500 million euros from the U.K. is also expected, the EU said.

Ireland’s government, which accepted the 85 billion euro international rescue package last year, is aiming to cut its budget deficit to 3 percent of GDP by 2015. Finance Minister Michael Noonan said yesterday the government may have to cut its 2012 growth forecast, and will publish a revision of its 0.8 percent growth forecast for this year in October.

‘Faster’ Approach

Irish central bank governor Patrick Honohan told lawmakers in Dublin that the government should consider a “faster” approach to cutting its deficit, and the current deficit plan is the “minimum required to ensure stability.”

Ireland’s budget deficit widened to 20.4 billion euros in the eight months through August compared with a shortfall of 12.1 billion euros a year earlier, the Finance Ministry in Dublin said in a statement today. The shortfall was boosted by the costs of bank recapitalization.

“The Irish authorities have maintained resolute implementation of their economic program,” the IMF said today as it completed the third review of the rescue package. “The economy is showing signs of stabilization and financial market conditions have also recently improved.”

“Ireland’s economy, however, faces a weakening in trading partner growth, which could dampen the pace of Ireland’s recovery in the near term,” the IMF statement continued.

--Editors: Kevin Costelloe, Vince Golle

To contact the reporter responsible for this story: Finbarr Flynn at fflynn@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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