Ireland exited its three-year bailout program yesterday, becoming the first eurozone nation to do so, but authorities warned of further austerity to ensure economic recovery.
Dublin turned to the IMF and EU in November 2010 for an 85 billion euro (US$115 billion) rescue package after a banking crash and one of history’s worst housing bubbles.
After painful belt-tightening, Ireland is returning unaided to the international lending markets — while eurozone strugglers Greece, Portugal and Cyprus remain locked into the bailout process.
“It’s an important moment for Ireland and for our people,” Irish Prime Minister Enda Kenny told the Irish Times newspaper in an interview published on Friday. “Our credibility is being restored internationally and our name is in good standing.”
Kenny was to deliver a state of the nation-type address on Irish television yesterday, just the sixth time a Taoiseach has done so in Irish history, other than during elections.
The end of the bailout means Dublin will now have greater control over economic decisionmaking after three years of stringent oversight by the EU, IMF and the European Central Bank — the so-called troika of lenders.
The troika insisted on tax rises, structural reforms and the sale of state assets in exchange for the bailout, and assessed Ireland’s progress every three months.
Ireland has returned to growth, unemployment is falling and the banking sector has been reduced to a more appropriate scale to match the size of the economy, but analysts agree the banks remain a risk.
The IMF approved the 12th and last review of Ireland’s progress on Friday, allowing a final US$890 million payout.
To mark the end of the bailout program, IMF managing director Christine Lagarde praised Ireland’s “steadfast policy implementation.”
However, Lagarde warned of “significant economic challenges” ahead.
“Unemployment is too high, public debt sustainability remains fragile and heavy private sector debts and banks’ slow progress in resolving nonperforming loans weigh on domestic demand,” Lagarde said in a statement.
Later this week, Dublin will publish a medium-term economic strategy outlining its post-bailout policies.
“This isn’t the end of the road. We must continue with the same types of policies as the deficit is too high,” Irish Minister of Finance Michael Noonan said.
As in Greece, Portugal and Cyprus, high unemployment levels are one of the major risks to economic recovery in Ireland.
Irish unemployment is falling, but remained at a high level of 12.8 percent at the end of the third quarter, a drop from 13.6 percent over three months.
“It’s a combination of focusing in on fixing the things that were broken in our competitiveness, offering and driving the transition into exporting sectors,” Irish Minister for Jobs Richard Bruton said. “I think it’s showing that effort is delivering well but there’s still a long way to go.”