Ireland bailout on track, risks remain: IMF

20th May 2011, Comments 0 comments

Ireland's bailout is on track but risks remain from weak growth, high unemployment, rating downgrades and other eurozone debt crisis developments, the IMF said in a progress report on Friday.

The International Monetary Fund said in an update on Ireland's EU-IMF bailout that it remained committed to the rescue package.

"The program is on track yet challenges remain and the external environment has become more adverse, hence steadfast policy implementation is key," the IMF said in a report after last November's 85-billion-euro ($121-billion) rescue.

Implementation of Dublin's new financial turnaround plan was "off to a strong start," the IMF noted, adding: "Risks to the programme ... have increased in some respects while declining in others."

The Fund said "slower growth and higher unemployment, further ratings downgrades, and developments in other euro area crisis countries ... hinders Ireland's prospects to regain market access on affordable terms in the near future."

In order to secure its bailout, Ireland in March ordered a drastic overhaul of the eurozone nation's stricken banking sector, as the cost of rescuing its lenders was forecast to top 70 billion euros.

The Central Bank of Ireland said that four lenders needed to raise an extra 24 billion euros after it carried out vital stress tests on their ability to withstand another financial crisis.

Since then, fellow debt-laden eurozone nation Portugal has also been forced to seek an EU-IMF bailout, while concerns are mounting that bailed-out Greece may need to restructure its vast debt.

In a blow to Ireland, new Prime Minister Enda Kenny has failed to secure a lower interest rate on Ireland's EU-IMF loans.

Ireland's once-proud 'Celtic Tiger' economy, famed for its double-digit growth for a decade from the mid-1990s, has contracted for the last three years. It has been sunk by the global financial crisis, a domestic property market meltdown and soaring unemployment.

The IMF predicts that the Irish economy will expand by 0.6 percent this year and 1.9 percent in 2012.

© 2011 AFP

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