Ireland in strong position to exit the bailout, says Rehn

Ireland is in a strong position to exit the bailout programme next month according to economics commissioner Olli Rehn.

He was speaking after meeting with Finance Minister Michael Noonan on the first leg of his round of meetings with the troika to discuss arrangements for Ireland’s exit from the programme in mid-December and the possibility of applying for a precautionary credit line together with any other ideas to ease the country’s exit.

Today, he meets with the ECB’s Mario Draghi when he is expected to discuss the buying of Irish bonds, and he flies to Washington to meet IMF director Christine Lagarde next Monday.

The minister told him of Ireland’s plans to reduce the deficit to 4.8% in 2014, well within the 5.1% target, and to deliver a primary balance or small surplus in 2014, while Mr Rehn was reported as saying that Ireland was in a strong position to exit the programme.

Following his meeting, Mr Noonan issued a statement describing it as constructive and said: “Ultimately, the final decision on post-programme options is one for the Irish authorities”.

The European Commission and the IMF are not pushing the Government to look for a credit line from the EU’s rescue fund, the ESM, while the third member of the troika, the ECB, appears to favour availing of the measure.

Mr Noonan initially he said it was a possibility, more recently has been indicating he may not want or need the credit line, but the option remains on the table.

There would be conditions attached to being granted a credit line which the Government would be obliged to fulfil even if money was not drawn down as the ESM consider just having the possibility of the funding gives the country an advantage on the markets.

These conditions would be similar to those agreed with the troika and would be set with the troika. They would likely involve going further with some of the reforms that have been part of the bailout programme.

The country will remain under strict supervision at least until 2015 when the Government’s deficit is due to be reduced to less than 3% of GDP, but even after that, state budgets and spending will be subject to oversight by the EU and must meet criteria agreed on spending on specific areas and on reducing debt and deficit levels.

The troika’s final programme review begins next week.