IMF pledges to help Ireland exit its bailout
DUBLIN (Reuters) - The International Monetary Fund will do what it can to help Ireland emerge from its EU/IMF bailout later this year, its chief said on Friday, praising the amount of work already done by Dublin.
As a member of Ireland's "troika" of lenders, the IMF was asked by European Union finance ministers this week to advise on how to help Ireland and fellow aid recipient Portugal return fully to international debt markets.
Ireland is confident it will get off emergency support on schedule at the end of this year after seeing its economy grow slowly and gradually resuming borrowing on bond markets over the last two years.
"We have an open mind about many issues, many of the terms and conditions, if you will, of the exit strategy," IMF Managing Director Christine Lagarde told a news conference on an official visit to the country, her first to a bailed-out euro zone state.
"We will look at all the options available," she said.
Lagarde said those options would have to be within the IMF's mandate and that its rules prevented it from extending the terms of Ireland's bailout loans, a concession that is currently being discussed at European level.
However, she reiterated that Europe should do all it can to assist the return of Ireland and Portugal to financial markets, not limiting its help to just extending loans under their EU/IMF rescue packages.
Lagarde also said the European Central Bank may need to cut interest rates further and countries like Germany accept higher inflation to help foster growth across the euro zone and ease the pain of recession and austerity for its citizens.
"Improving sentiment is not translating into higher jobs or incomes. It might be helping markets, but it is not yet helping people," she said.
Ireland and Portugal have asked for their emergency loans to be extended in maturity by an average of 15 years and EU finance ministers may make a decision in April after hearing from the "troika", which comprises the IMF, EU and ECB.
"HUGE BY ANY STANDARD"
Ireland has been one of the success stories of the euro zone debt crisis, something that is not lost on European leaders keen to see it emerge from its bailout, and Lagarde said Ireland's implementation of its reform program had been extraordinary.
Speaking alongside finance minister Michael Noonan, she praised Ireland's "tenacious" efforts and said she hoped the timid global recovery will help boost the Irish economy, which is driven by its export sector.
"What has been done is huge by any standard ... Clearly a huge amount of work has been done and it should be recognized," Lagarde said.
"The determination showed in implementing the program has been extraordinary. It doesn't mean to say that all has been done but I would say that more than two-thirds has been done in terms of fiscal policies."
Areas Ireland needs to focus on include fixing the country's banks, the former French finance minister said, adding that while a huge amount of work had been done, more was required to ensure the sector is put on a solid footing.
Data released on Friday suggested the banking industry is becoming more stable, with reliance on emergency funds from the ECB falling to 61.8 billion euros in February from 70.1 billion a month earlier.
She also warned that the scale of fiscal consolidation to come should not strangle growth and that Ireland's still-high unemployment rate of 14.2 percent risked fraying the social fabric in a country where social upheaval has been limited.
"In too many places across Ireland, people are becoming increasingly demoralized, disengaged and disenchanted," Lagarde said in a speech.
"There is a real risk of a fraying of social fabric, a breakdown of communities, of people losing faith in the system so we need renewed efforts to help these people find jobs."