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IRELAND’S NEW DEAL on its EU/IMF bailout could mean it will return to normal lending markets by 2014, according to research from the Economic and Social Research Institute (ESRI).
The economic think tank believes that the country’s debt-to-gross domestic product (GDP) ratio will be significantly lower than previously estimated and that the budget deficit will hit a target of being below 3 per cent of GDP in three years time.
In its 31-page analysis of the debt crisis in Ireland, the ESRI believes the cut in the interest Ireland pays on its bailout will help it return to normal funding mechanisms a year earlier than previously estimated.
In July, Ireland received a cut in the interest it pays on the European portion of its €67.5 billion bailout loans to around 4 per cent from a previous level of 5.8 per cent.
The lower than expected bill for recapitalisation of the banking sector is also a contributory factor to the ESRI’s more positive outlook.
The current deal requires Ireland to impose austerity measures that will cut deficits to under 3 per cent of GDP by 2015 but this could happen a year earlier with the ESRI saying the government will “almost” reach the target in 2014.
However, three more austerity laden budgets lie ahead.
Last week, the ESRI in its economic growth forecasts called for an extra €400 million to be cut from the budget which will be delivered in December.
Under the EU/IMF deal, Ireland is required to cut at least €3.6 million through spending cuts and savings in the next budget but the ESRI said it should be €4 billion.
The ESRI also predicts that the country’s gross debt will peak in 2012 at between 110 per cent and 115 per cent of GDP before falling back to between 105 per cent and 110 per cent by 2015.
While, the country’s net debt will peak at between 100 per cent and 105 per cent of GDP in 2013 and fall to 98 per cent of GDP by 2015, it added.
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Great article. Just forgot to mention the bit where are income will take yet another nose dive in december to pay for it. Time to go.
Every so often these “pat on the back” stories are thrown at us in an attempt to blind us to what’s round the corner.
“Keep sacrificing yourselves citizens of Ireland, for your current strife and hardships is getting plaudits”.
It’s all lies anyway
if my income takes another hit ill be moving elsewhere.
2014? The Euro will be dead and buried long before then..
If Lenihan hadn’t the negotiating skills of General Custer, we’d been nearly out of this crisis by now.
Well sir, you pay peanuts and you get monkeys….no wait….
Does anyone doing these forcasts look at the human cost of all of this? When they throw out a statement suggesting that an additional €400 million should be loped of the budget do they ever consider what that means in real terms to people rather then the figures?
Mean while the retiring secretary general to the Government Dermot McCarthy received a combined retirement and pension package worth over €700,000. Farcical…………….
Coincidence that ERSI, of the ‘soft landing’ school of economics, releases its upbeat assessment in the week of government think-ins? Must be spintime again. The actual reduction in net term is minute and fragile when set against European stagnation and likely further banking problems.
God I’m sick of this he said this and they said that bullshit
What a load of tripe .., they set out to raise income tax and VAT and lower spending , they reach a target set by ESRI and clap eachother on the back , until next month or 3 months down the line when it all goes belly up again, papering over the cracks just don’t do it , the good Minister is in support of companies recruiting at sub-standard wages, that means less income tax surely? , less wages means less disposable income..which in turn leads to a significant drop in consumerism , which equates to very little VAT income … all in all does that not mean Ireland will be in less of a position to repay her creditors in Frankfurt ?
That was good at the end, the gross and net debt figures. One was higher than the other.
have your say