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Ireland gets £1.2bn IMF payout

• Money part of wider European bailout
• Country praised for ‘resolute’ implementation of austerity programme

The International Monetary Fund approved a further €1.4bn (£1.2bn) payout to Ireland on Friday as part of a wider European bailout.

Ireland’s government announced a four-year €15bn austerity programme last year, which included deep cuts to public spending and benefits, and large tax hikes. The programme paved the way for a €85bn bailout package from the IMF and the EU.

The four-year plan was intended to help the debt-stricken country take control of its financial crisis and the IMF said on Friday that its government had “maintained resolute implementation” of the programme.

It also said Ireland’s efforts to reorganise and reduce debt in its domestic banks was “ahead of schedule in some areas”.

While Ireland has so far received €8.7bn of the total bailout package it has also been restricted from accessing the bond markets – which in effect means it cannot borrow money on its own.

One of the biggest fears within the eurozone about Ireland’s financial crisis and of other troubled member states such as Greece, has been in the threat of contagion. Despite the praise for being on target, the IMF was also keen to stress Ireland had to continue with the austerity programme to “rebuild market confidence”.

“Continued timely implementation of the programme remains essential to support the ongoing recovery, limit contagion risks and rebuild market confidence,” it said. Despite fears last year that Ireland could be forced to extend the bailout or seek a second rescue if it failed to return to the bond market by itself, the Irish finance minister Michael Noonan said he did not expect that to happen.

“Any country that is fulfilling its programme, if it still needs funds and can’t access the markets, will get credit lines from the fund so that the question of Ireland having to re-enter a second programme is off the table,” he said on Thursday.

He said Ireland, which has experienced a three-year fall in economic output, expected its economy to expand this year.

Noonan admitted however that problems in the global economy had increased the risks to Ireland’s recovery and would most likely cause the government to cut its 2.5% growth forecast for next year. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds