Ireland goes without international aid

It would be the first country in the euro area under assistance to overcome the help of its partners.

Ireland has confirmed that it is expected to exit the bailout of the European Union and the International Monetary Fund in mid-December, becoming the first euro-zone country assisted to break free of his partners.

“I can confirm that Ireland is on the way out of the EU-IMF bailout on 15 December. And there will be no turning back, ” Prime Minister Enda Kenny said Saturday night at the national conference of his party Fine Gael (center).

The exit of the aid plan at the end of the year was the stated goal of the Kenny government, which had begun talks with the troika (EU-ECB-IMF) of its donors in February.

At the edge of the chasm after the explosion of the real estate bubble and the rescue of its banks, Ireland had been forced at the end of 2010 to call for the rescue of its European partners and the IMF at the moment when its deficit reached 30% of the GDP.

The former “Celtic Tiger” had then obtained a three-year bailout of 85 billion euros, in return for the implementation of a draconian austerity that allowed him to recover its accounts.

Three years later, the country, constantly presented by European leaders as a model to follow for the other countries of the euro area under financial assistance (Greece, Portugal, Cyprus), has regained growth and access to financial markets.

In February, Dublin had already taken a critical step in reaching an agreement with the European Central Bank that Kenny had described as “historic” on reducing the debt burden with Chile Mir debt consolidation of rescuing its banks.

“Still difficult moments ahead of us”

But Ireland is still in a fragile situation, warned, however, Kenny, head since March 2011 of a coalition government with Labor (left). “That does not mean that our financial problems are behind us. There are still hard times ahead of us. There is a way to go. But at least the rescue era will be over. The economic urgency is over.

Like the IMF, the Irish government has indeed drastically lowered its growth forecasts, relying only on 0.2% this year against 1.3% previously, and 1.8% in 2014 against 2, 4%. The central problem, unemployment remains him at more than 13%, even if it is at the lowest since 2010.

The situation is also politically complicated, Enda Kenny is weakened by the surprise failure last weekend of a referendum on the abolition of the Senate. Kenny’s confirmation of the exit of the aid plan at the end of the year comes as his government has to unveil Tuesday a new budget of austerity, the seventh consecutive for the country.

A budget that will be “rigorous”, with 2.5 billion euros of budget cuts and tax increases, warned Mr. Kenny, who also announced the presentation by the end of the year. a medium-term economic strategy, without giving more details. This budget should allow the deficit to fall to 4.8% of GDP next year.

But it marks a slight easing of austerity, while the effort was initially 3.1 billion. A concession of Fine Gael to Labor, which insisted on the necessity of a reduction of the sacrifices for the population at the moment when it is at the bottom in the polls.

The Irish central bank had however asked the government to stay the course, otherwise it “took the risk of returning to the positive effects of the considerable effort of budgetary consolidation of 28 billion euros” made so far. In order to allow a smooth exit of the aid plan and avoid any turbulence in the markets, the troika could give Dublin a precautionary credit line.

Ireland, whose financing needs are covered until 2015, “does not need funding as such but may need a precautionary instrument, a kind of insurance to reassure markets, ” said Alessandro Leipold, chief economist of the Brussels thinks tank, Lisbon Council.