Insight: Ireland's bailout report: Good, now fix public debt

Tue Oct 22, 2013 4:01am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Sam Cage and Padraic Halpin

DUBLIN (Reuters) - At the height of the euro zone's debt crisis in July 2011, Ireland's bailout looked doomed. Its credit rating had been cut to junk and borrowing costs hiked to an eye-watering 15 percent.

Nonetheless, Bank of Ireland convinced a group of North American investors to part with 1.1 billion euros and help stave off a state takeover. It was an early sign that Ireland could do what was needed to turn itself around.

Now the country's 85 billion-euro rescue is a rare and much needed success story for Brussels and its austerity policies that will be completed in December when the European Union, International Monetary Fund and European Central Bank formally release Ireland from their strict oversight.

"For our country it's been a backbreaking time, but it had to be. Because it was clear that only radical action could save us from total ruin," Enda Kenny, the premier who oversaw most of the three-year bailout, said at a party congress this month.

Driven deep into debt by a bank rescue and ballooning budget deficit, Dublin sought help in November 2010 to buy time to get its budget gap under control, overhaul its banks and regain market confidence. On those terms, the program has succeeded.

Ireland has hit every major target and the economy is on the mend, albeit slowly. The country of 4.6 million, with its history of poverty and emigration, managed to pass on salary cuts and tax rises without large-scale protests and also rewarded the investors who swooped on debts ranging from bad bank loans and government bonds to hotels and property assets.

"Ireland did what Ireland had to do and now everything is fine," German Finance Minister Wolfgang Schaeuble said recently.

Yet some major problems remain that could choke recovery.   Continued...

 
Ann Cronin sits with a dog as she packs her belongings in preparation for her family's emigration from her hometown of Ennis in County Clare, to New Zealand September 27, 2013. REUTERS/Cathal McNaughton