Ireland will exit its three-year, 67.5 billion euro bailout program without a line of credit from the European Union and IMF.
The Irish government’s decision will make Ireland the first of the eurozone’s four bailout recipients to wean itself off emergency aid from EU and International Monetary Fund.
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Ireland to exit next month
Ireland’s Prime Minister Enda Kenny announced today that Ireland will exit its international bailout agreement next month without the safety net of a precautionary credit line. This is a sign that the Irish are confident they won’t suffer a beating in the bond markets.
The Prime Minister told the lawmakers that the country would exit the bailout in a strong position. Exuding confidence, Kenny said would-be buyers of new Irish bonds should be reassured that the country has built up over 20 billion euros ($27 billion) in emergency reserves. Next month, the government will unveil a medium-term plan to spur economic growth while continuing to rein in the national debt.
The Prime Minister emphasized that never again will the country’s fortunes be sacrificed to speculation, greed and short-term gain, pointing to the previous Irish government’s decade-long stoking of a runaway property market and weak regulation of banks.
Success story in eurozone
Padraic Halpin and Conor Humphries of Reuters point out Ireland has funded itself into 2015 with timely debt issuance over the last 18 months. Three years ago Ireland was unable to raise a cent on bond markets. Thus the country is helping create a much-needed success story for the rest of the eurozone.
As reported earlier, Ireland was the first European country to watch its entire banking system fail. Unlike the Icelanders, who refused to bail out their bankrupt banks, in September 2008 the Irish government gave a blanket guarantee to all Irish banks, covering all their loans, deposits, bonds and other liabilities. Within two years, the state bank guarantee had bankrupted Ireland.
However, in September we reported that the latest figures from the Central Statistics Office indicate that Ireland has emerged from its recession. It was felt Ireland might be on track to become the first country to exit a bailout since the European crisis.
While announcing his country’s plan to exit from the bailout program to Parliament, Kenny highlighted the latest move is a series of steps to return the country to normal economic, budgetary and funding conditions. However he cautioned the country still has a long way to travel but clearly it is moving in the right direction.