Ireland’s latest bailout tranche agreed

The European Commission has formally approved payment of the next €5.8bn tranche of Ireland’s bailout fund — bringing to €32.2bn the amount of aid the country has received since the programme began two years ago.

The approval follows the latest joint review by the European Commission, ECB and IMF troika that took place in Dublin in January.

The commission yesterday reiterated “that programme implementation by Ireland remains strong and on track, while some challenges remain”.

The commission added: “Future challenges and risks would depend on any further financial turbulence in the euro area, with potential knock-on effects on bank deleveraging and the availability of credit to the domestic economy.

“A further drop in the demand for Irish exports could also weigh on budget performance through its spill-over effect on Ireland’s overall growth. This is why it is essential that the Irish authorities remain steadfast and pursue full implementation of the programme in the interest of boosting competitiveness, growth and much needed jobs.”

However, the EC also noted major progress in the areas of the banking system — in terms of recapitalisation and downsizing — household debt and labour market reforms.

“The fiscal deficit in 2011, is estimated to have been kept at around 10% of GDP, well below the ceiling set out in the programme (10.6% of GDP). The 2012 budget is in line with the deficit ceiling for this year (8.6% of GDP).

“Binding ceilings on expenditure for each line ministry offer further credibility to the Irish Government’s commitment to bring the fiscal deficit down to below 3% of GDP by 2015 — in line with the EU’s excessive deficit procedure,” it added.

It noted that the bailout programme should cover Ireland’s funding needs until the second half of 2013, and welcomed the NTMA’s recent debt swap.