Report on programme review of the EU-IMF financial assistance for Ireland; a description of changes introduced to future programme conditionality; and the fiscal and economic outlook for Ireland. A joint EC/IMF/ECB mission visited Dublin between 17-26 April 2012 to conduct the sixth review mission under the Economic Adjustment Programme. The mission found that programme implementation remains strong, tough important risks and challenges remain, mainly due to still fragile investor sentiment towards Ireland and continued uncertainties in the outlook for growth and debt sustainability in euro area Member States.
The overall positive assessment of compliance paves the way for the release of €2.3 billion from the EFSM, €1.4 billion from the IMF and around €0.5 billion from a bilateral loan from the UK
Despite the substantial progress made so far, the programme's ultimate success remains subject to important risks. These have to do with still fragile market sentiment towards Ireland, continued uncertainties in the outlook for growth and debt sustainability in the euro area, and the complexity of the envisaged financial sector reforms. A specific source of risk is the reform of the personal insolvency regime, given difficulties in drafting legislation that strikes the right balance between promoting the restructuring of unsustainable debt burdens and protecting creditor rights. Careful design and prompt finalisation of the framework will be necessary to avoid a deterioration of payment discipline and thus the quality of banks' loan portfolios.
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