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25th Jun 2018

Ireland looks to 'successful' exit from bailout programme

  • The Irish have shown 'exceptional patience,' said Kenny (Photo: Council of European Union)

Ireland is holding itself up as an example of hope for other ailing eurozone countries, saying it is on track to come out of its EU-International-Monetary-Fund (IMF) bailout programme later this year, but that it wants a debt deal first.

"I do believe that Ireland can send a message of hope to other countries as an example of what can be achieved," said Irish Prime Minister Enda Kenny on Thursday (10 January).

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Ireland was given a €85 billion package in 2010 after its property bubble burst, causing the collapse of the banking system. In return, the government introduced several rounds of austerity measures, affecting healthcare, education, pensions, social and welfare spending.

The cutbacks earned it praise in Brussels, but it is still suffering from high unemployment and a return to large scale emigration.

"Very tough decisions have been made," said Kenny, referring to the "exceptional patience" of Irish people.

Eamon Gilmore, deputy prime minister and present at the same press conference to mark the beginning of the country's EU presidency, was also keen to stress the symbolic importance of Ireland exiting the EU-IMF programme..

"I think what the people of Europe need is a sense of hope that things are going to improve. One of the things that will provide that hope is Ireland emerging from the programme that we are in," he said.

But both politicians linked the exit to a deal with EU partners on promissory notes - the high-interest terms for recapitalising the former Anglo Irish bank - and to securing an agreement on allowing the eurozone bailout fund to recapitalise banks directly, rather than having the debt go on state books.

Solidarity is a "two-way street" noted Kenny, with Ireland having lobbied for months to get the deal on Anglo Irish bank restructured, something that would enable further budget consolidation.

Dublin is hoping for a deal with the European Central Bank on the €31 billion promissory note loan before March when the next interest repayment (€3.1bn) is due.

This would allow for a "successful" exit from the programme, said Kenny. Meanwhile, Dublin is also keen to use its EU presidency to push the Brussels legislative machinery forward to create a single eurozone banking supervisor, needed for the bailout fund to directly fund banks.

"For Ireland to exit its programme successfully, we do need a conclusion to the negotiations on the promissory notes and the conclusion on a banking dealing arising from the decisions in the month of June," Kenny said, referring to an EU summit in June 2012 where leaders committed to breaking the link between sovereign and banking debt.

According to Gilmore, this would "demonstrate that a country in trouble, by its own efforts and the support of the European Union as a whole, can recover, can exit from the programme, and can grow, create jobs and a sustainable future."

"Over the last couple of years, we have spent a lot of time focussing on countries where there are difficulties. Now we need to start focussing on recovery and providing hope in Europe that jobs are going to be created and that people are going to have a secure future," he added.

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The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

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