Ireland Bailout Exit Nears After Last Review

Ireland will next month become the first eurozone country to exit a bailout programme after the EU and IMF completed their final compliance review.

Finance Minister Michael Noonan and Expenditure Minister Brendan Howlin said in a joint statement: "This is a significant day, that many thought, and some feared, would never be reached."

But Mr Noonan confirmed that no decision had been taken as to whether the country would require a precautionary credit line or financial backstop after it exits the bailout on December 15, though a decision on any 'overdraft' would be made by that date.

The Irish Government has claimed it is in a strong position to re-enter the international money markets.

Michael Noonan still faces tough spending choices

"We're positioned to decide as a Government which course of action is in the best interest of Ireland and it's a free choice. We're not being pressured by anybody," Mr Noonan insisted.

It was three years ago that the country went cap-in-hand to the international lenders for a €85bn bailout.

Debts resulting from a rescue of its bank sector in 2008 eventually forced Ireland into seeking the aid from the International Monetary Fund, the ECB and EU in 2010.

Five years of austerity sparked a so-called brain drain as the jobless total rose amid widespread anger at the behaviour of the banks.

But it resulted in little of the unrest that has rocked Greece and Spain and is now seen by some economists as a much-needed success story for the EU, which wants to show that the discipline of tax hikes and spending cuts can work, despite the hardship they have imposed on the Irish people.

Irish debt yields have dropped from a 2011 peak of 15% to about 3.5% and the budget deficit has fallen from nearly a third of gross domestic product (GDP) in 2010 to an estimated 7.3% this year.

That is still the highest deficit-to-GDP in the EU, partly because Ireland's economy is barely growing and it needs growth rates of 2-3% to make hefty national debt sustainable.

Unemployment, though falling, is above 13% and one in five home loans, worth €25bn are not being fully repaid.

But the wider improvements have been enough to gain the government some market access, highlighted by a 10-year bond issue in March, but forgoing a precautionary line could leave it vulnerable to future market shocks and unable to access the ECB's government bond purchases scheme.

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