Ireland has met bail-out conditions, report says

Ireland has met all the economic conditions imposed on the country in return for its €85 billion (£68bn) bail-out package – but it still faces major challenges, the European Commission has said.

In a report on the performance of all member states under increased monitoring powers in the wake of the economic crisis, the commission says Ireland met its fiscal deficit target last year, beat its target for cutting bank debt, and returned to “modest” growth. But it still faces unemployment of 14.3 per cent this year and is exposed to risks in the rest of the euro area and the chance of extra pressure on the domestic budget from weaker economic activity than anticipated.

The report says the EU-IMF “Economic Adjustment Programme” Ireland agreed as the price of a bail-out is designed to restore the confidence of the financial markets in the sustainability of Irish public finances and banking sector. That should lead to a return to robust economic growth and market funding. “Ireland has made significant progress in programme implementation, but major challenges remain” it says. “All the programme’s conditions have been met and available information suggests the policy conditions are also broadly on track to be met.“

Last year, Ireland returned to “modest, export-driven growth” of 0.7per cent. Employment fell by 2.1 per cent in 2011 as a whole, but grew by 0.6 per cent in the final quarter of last year. Unemployment is expected to reach 14.3 per cent in 2012.

The report says Ireland aims for a deficit below 3 per cent of GDP by 2015.