Officials from the Troika made their twelfth and final visit to Dublin yesterday ahead of Ireland’s exit from the EU/IMF bailout programme in December.
Ireland will become the first eurozone country to exit the programme, a remarkable achievement by any standards and one for which Finance Minister Michael Noonan can take a certain amount of credit.
Exiting the bailout will be a positive signal to the international markets that Ireland is once in charge of its own affairs.
In a way, that has already happened. In July the credit ratings agency Standard and Poor improved its long-term rating for Ireland from stable to positive and other ratings agencies are expected to follow suit.
But Standard & Poor’s view of Irish banks was far from favourable, because “most Irish banks remain loss-making, have severe negative equity and elevated arrears, and no Irish bank has meaningfully re-established access to wholesale funding”.
The agency also struck a cautionary note in its trenchant criticism of Ireland’s financial services regulation. “The weak regulatory track record continues to weigh heavily on our view of the Irish institutional framework, not least because we believe that the authorities are not being sufficiently proactive with regard to capitalisation, stress testing, or the timeliness and frequency of bank reporting,” it said.
That should temper any tendency by the Government to view our bailout exit as a sign that Ireland’s economic ills are over.
The fragility of the Irish economy is also evident, with 250,000 jobs particularly vulnerable in the retail sector. ISME, the Irish Small & Medium Enterprises Association, yesterday repeated its demand for the Government to address the risks to the retail sector and to implement immediate policies to tackle the cost base in order to secure the jobs in the industry.
As the latest CSO figures confirm, consumer sentiment remains negative. According to ISME chief executive Mark Fielding, “the Government seems to be more concerned with spin than addressing the immediate concerns of real businesses on the ground”.
Pointing out that large multinational multiples and department stores have the monetary muscle to survive the recession, it is clear that many of Ireland’s indigenous retailers do not.
“What is required is a Retail Strategy Group to advise on a clear road map, which will provide confidence to both consumers and small business, allowing for increased spending and investment,” said Mr Fielding.
Having listened to the Troika, Mr Noonan might lend an ear to those closer to home.