Ireland Bailout Ends
The most obvious evidence of renewed Irish confidence is all the "sold" signs suddenly appearing in Dublin, home to nearly a third of the country's 4.6 million residents and the epicenter of a property bubble that burst with disastrous effect in 2008. Property prices had slumped more than 50 percent in the five years since as credit crumbled, banks drowned in toxic assets and hundreds of thousands became trapped in negative equity. The market is finally stirring again.
Ireland still faces a mountain to climb to achieve its key goal of reducing its annual deficit back below 3 percent of gross domestic product, the limit supposed to be observed by all 17 nations using the euro currency.
Ireland recorded a European Union record deficit of 32 percent in 2010, the year that the bill for sustaining the country's six domestic banks grew so large that Ireland's credit ratings crumbled.
But since coming to power in early 2011, Kenny's government has reformed banking regulation, negotiated with the European Union to spread out bank-debt repayments over several decades and imposed tens of billions in annual cuts and new taxes targeting every sector of society.As part of its reform agenda, EU and IMF chiefs ordered Ireland to impose new charges and limits on the state old-age pension system and on welfare pay for the young. Ireland must also introduce a new property tax in line with international practice. A much-debated water tax is still in the pipeline for next year. Ireland's major economic think tank, the Economic and Social Research Institute, estimated in a report this week that five straight years of cuts dating to the early days of the 2008 banking crisis have pruned most workers' take-home pay by about 12 percent. Those best off have lost more than 15 percent of their incomes. Ireland's deficits have marched steadily downward from 8.2 percent last year to an expected 7.3 percent this year. Finance Minister Michael Noonan says Ireland hopes to post a 4.8 percent deficit in 2014, then 2.9 percent in 2015. But he said Ireland would keep pruning to get its later deficits down to the eurozone's future rule of below 0.5 percent of GDP. "This isn't the end of the road," Noonan said of the bailout exit. "This is a very significant milestone on the road, and it gives us an opportunity to pause and reflect for a very short period.
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