FRANKFURT (MNI) – The following is the verbatim text issued from
the European Commission, the European Central Bank and the International
Monetary Fund on Thursday following the regular quarterly review of the
Irish government’s economic program:

Staff teams from the European Commission, the European Central Bank
(ECB) and the International Monetary Fund (IMF) visited Dublin for the
regular quarterly review of the governments economic programme from 10
to 19 January 2012. The teams’ assessment is that the programme is on
track, but that challenges remain and that a continuation of steadfast
policy implementation will be key. The European Commission and IMF
missions will seek approval for the completion of this review from the
relevant EU bodies and the IMF Executive Board respectively.

Programme implementation remains strong. The front-loaded fiscal
consolidation is on track, with the 2011 deficit significantly below the
programme targets. The Irish authorities have continued to push ahead
with wide-ranging reforms to restore the health of the financial system,
so that it can support Irelands recovery. Reforms to enhance
competitiveness and support growth and job creation are moving forward.

The substantial fiscal consolidation targeted for 2011 has been
achieved with a margin. Budgetary measures in the order of 3.5% of GDP
have reduced the estimated general government deficit to about 10% of
GDP, well within the programme target of 10.6% of GDP. This result was
achieved despite weaker domestic demand, reflecting the authorities’
strong management of revenues and firm expenditure controls. The budget
for 2012 targets further consolidation in the order of 2.75% of GDP, so
as to lower the deficit to 8.6% of GDP, and sets out a clear path for
reaching the deficit target of 3% of GDP by 2015.

Major progress in strengthening and downsizing the banking system
was made in 2011. The two pivotal banks met the 2011 deleveraging
targets with almost 15 billion of predominantly foreign assets sold at
better prices than anticipated. Implementation of the strategy to
restore the viability and solvency of the credit union sector is
underway. More conservative provisioning and disclosure guidelines will
enhance the transparency of banks 2011 financial statements.

Steps to support growth and job creation are being put in place.
Reforms of sectoral wage agreements, so as to make wage-setting in
occupations that have been hit hard by recession more responsive to
economic conditions, have been submitted to Parliament. Asset disposal
plans are being finalised, with the primary goal of strengthening
competition and efficiency in key sectors, while securing value for the
state.

Looking ahead, Ireland nonetheless continues to face considerable
challenges. Domestic demand remains subdued, unemployment high and
trading partner growth is slowing. As a result, projected GDP growth for
2012 has been revised down to 0.5%, from an estimated 1% in 2011.

In this more challenging environment, maintaining Irelands track
record of strong programme implementation remains key to a sustained
recovery and the achievement of Irelands return to capital markets.
Accordingly, the authorities priorities in first half of 2012 include
the publication of a fiscal responsibility bill to underpin the
budgetary consolidation achieved. The authorities are also working with
lenders to promote efforts to address loan arrears, and they will
publish a modernised personal insolvency framework. The authorities are
also strengthening the effectiveness of activation and training policies
to help job seekers get back to work.

The objectives of Irelands European Union and IMF-supported
programme are to address financial sector weaknesses and to put
Irelands economy on the path of sustainable growth, sound public
finances and job creation, while protecting the poor and most
vulnerable. The programme includes loans from the European Union and EU
Member States amounting to E45.0 billion, and a E22.5 billion Extended
Fund Facility with the IMF. Irelands contribution is E17.5 billion.
Approval of the conclusion of this review will allow the disbursement of
E3.2 billion by the IMF, and E6.5 billion by the EU. The mission for the
next programme review is scheduled for April 2011.

[TOPICS: M$$CR$,M$X$$$,M$$EC$]