Ireland’s government will beat its budget deficit target for a second straight year in 2012, the Finance Ministry said.
The deficit will narrow to 8.3 percent of gross domestic product from an underlying 9.4 percent last year and a target of 8.6 percent, in part because of lower than anticipated debt- servicing costs, the Dublin-based ministry said in an update to its December forecasts. The target was set as part of the nation’s bailout program.
Following its sixth review of Ireland’s 67.5 billion-euro ($89.5 billion) program, European and international authorities said yesterday that while the country is on track to reach its deficit target, “considerable challenges” remain. The economy will grow 0.7 percent in 2012, the ministry said today, cutting its December forecast of 1.3 percent.
“Prospects for domestic demand have weakened in the past few months, while external headwinds remain significant,” the ministry said. “The nascent recovery is expected to both broaden and gain ground in 2013.”
The economy will grow 2.2 percent next year, the ministry said, cutting its December forecast of 2.4 percent.
Ireland, which sought a bailout in 2010 after it was locked out of international markets, may start a “gradual” return to the market this summer, Finance Minister Michael Noonan said yesterday. The National Treasury Management Agency said in January it is looking at the possibility of selling short-term debt in June or July.
“The NTMA remains in regular contact with a broad range of market participants, and conditions permitting, is seeking to gradually extend its presence in the short-term debt market before seeking to raise longer-term debt later this year,” the ministry said today.
Ireland’s October 2020 bonds, regarded as the benchmark, yielded 6.86 percent, down from 9.1 percent at the start of December.
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