Three years after being saved from bankruptcy, Ireland will exit the Eurozone bailout programme on 15th December 2013.
The Troika programme
A three-party committee led by the European Commission, the European Central Bank and the International Monetary Fund was organised loans to Greece, Portugal, Ireland and Cyprus.
Of all the four counties that have benefited from the bailout due to the Eurozone crisis, Ireland will be the first country to exit from the bailout programme.
The price of bailout
Ireland cut spending and raised taxes to balance the economy after seeking bailout in 2010.
The government earned €28bn through budget cuts and increases in tax over the last three years. Taxes were hiked to €5.3bn and a cumulative spending cut was €9.6bn.
Ireland’s cost to borrow money has now fallen to 3.5% from the earlier 15%.
Ireland invested about €64bn into the banking system during the crisis – equivalent to 40% of the gross domestic product (GDP). Income of €4.2bn has been generated by the bank guarantee for the Exchequer. €2.3bn has been repaid in 2013 following the sale of the Bank of Ireland CoCos (Convertible Contingent Capital), the successful sale of Irish Life and the redemption of the preference shares to the State by Bank of Ireland.
Future of the bailout
Ireland’s ability to exit the bailout has been driven by a focus on managing public finances, restructuring the banking and financial system and focusing on jobs and growth enhancing strategies.
“This isn’t the end of the road. This is a significant milestone on the road,” said Michael Noonan, the minister of finance, said at a press conference.
Before the bailout, about 7,000 jobs were being lost every month. Over the last year, the Irish economy has created 58,000 new jobs. The unemployment rate is now 12.5%. Public sector wages have dipped by 5%.
The current level of debt is 124% of the GDP is above the European average of 94%.