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EU, IMF: Ireland on track with deficit cuts

DUBLIN — Ireland is successfully cutting its deficits, bolstering its banks and pursuing job-creation strategies, its international bailout creditors said Thursday as they signaled support for a further round of loans.

Ireland welcomed the verdict from the European Union, European Central Bank and International Monetary Fund following the organizations' latest 10-day review of Irish efforts to rein in runaway debts as part of the country's 2010 bailout agreement.

Ireland has already spent more than two-thirds of the €67.5 billion ($90 billion) credit line that is designed to finance it until 2013 when, all sides hope, it will resume borrowing on bond markets at affordable rates.

Finance Minister Michael Noonan said he hoped that rising confidence in Ireland would permit its treasury to resume market-testing bond sales as soon as this summer, though he conceded "we don't have a fixed timetable."

In a joint statement, officials from the EU, ECB and IMF — known as the troika — said Ireland's work to cut spending and inefficiency, boost tax collections and restructure its debt-crippled banks "continues to be strong." They noted Ireland met its 2011 deficit targets "with a healthy margin," said it appeared on course to do the same this year, and voiced support for government efforts to create new jobs amid rising emigration and 14.3 percent unemployment.

As part of its bailout accord, Ireland has pledged to sell up to €3 billion ($3.95 billion) in state assets, including power plants. In an important development, the government said EU and IMF officials had agreed to permit it to funnel an increased proportion of those profits into job-creation efforts, not plow it all back into debt reduction as originally planned.

Prime Minister Enda Kenny said Ireland intended to invest half of the expected privatization profits into projects to stimulate business growth.

The Irish and foreign officials agreed that Ireland remains particularly vulnerable to economic pressures beyond its shores, because of the country's exceptional dependence on the performance of some 950 multinationals based here. The export-minded companies focused on drugs, microchips, software and information technology generate nearly a fifth of gross domestic product.

The troika said Ireland's ability to achieve a 2011 deficit of 9.4 percent of GDP, excluding exceptional bank-bailout costs, was much better than their target of 10.6 percent and reflected better-than-expected profits by the multinationals. They said Ireland would likely see tepid GDP growth of just 0.5 percent this year.

Noonan said Ireland was more optimistic, but still intended to trim its own 2012 growth forecast from 1.3 percent down to around 0.75 percent of GDP.

The troika officials said their leaders in Brussels, Frankfurt and Washington are expected to approve Ireland's next installment of loans — €2.3 billion from the EU and €1.4 billion from the IMF — within the next few weeks.

Ireland in 2010 was forced to negotiate an EU-IMF rescue loan as investors fearful of an imminent national default quit lending to the country at affordable rates. Ireland found itself financially overwhelmed as it nationalized five of its six banks at a cost expected to reach €70 billion ($90 billion), or approximately €15,000 ($20,000) per man, woman and child in Ireland.