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02 May 2014

ECB/EC: Conclusion of the first post-programme surveillance mission to Ireland


Following the successful completion of the EU/IMF financial assistance programme at the end of 2013, the outlook for Ireland has continued to improve.

Against the backdrop of a general decline of sovereign yields, demand for Irish assets from private investors is high as the authorities are resuming normal market borrowing. The economic recovery and the decline in headline budget deficits continue, while structural and financial sector reforms advance. Nonetheless, high public and private sector indebtedness weigh on the speed of the recovery, especially of private consumption.

High-frequency indicators continue to point towards a gradual recovery in 2014 as external demand developments support exports and domestic demand stabilises. The general government deficit narrowed by over one percentage point of GDP in 2013 to 7.2 per cent of GDP, within the 7.5 per cent limit set under the Excessive Deficit Procedure (EDP). In 2013, revenue over-performed compared to plans while overall expenditure was on track; overruns in the health sector were offset by savings in other areas. The 2014 general government deficit is on track to stay within the 5.1 per cent EDP ceiling. This projection assumes a rigorous implementation of the budget to offset health sector overruns, and is predicated upon a favourable growth and employment outlook. The authorities remain committed to reducing the general government deficit to below 3 per cent of GDP in 2015, though specific adjustment measures are still to be determined and will be communicated in their Draft Budgetary Plan in October.

Structural reforms initiated under the EU/IMF-supported programme continue to progress. Active labour market policies focus on improving the delivery of support services in Intreo offices and on partially contracting out the provision of services to the long-term unemployed. At the same time, further education and training reforms aim to reduce significant skills mismatches and better address the needs of jobseekers and employers. Continued progress on these initiatives and on the Action Plan for Jobs will be critical to maintain the positive momentum on job creation and reduce youth and long-term unemployment. 

The next PPS mission will take place in late 2014.

Full press release




© ECB - European Central Bank


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