IMF completes Ireland’s 11th bailout review

The International Monetary Fund (IMF) has recently completed its 11th review of Ireland’s bailout programme and has approved the release of the latest tranche of funding, which is estimated to be around €770 million. The review assessed the performance of the Irish economy and the progress made in implementing the agreed-upon economic reforms and fiscal measures.

Economic Contraction in the Second Quarter

According to the IMF’s assessment, the Irish economy experienced a contraction of 1.2% year-on-year in the second quarter. This decline was primarily attributed to a decrease in exports and a shrinkage in domestic demand. These factors had a negative impact on the overall economic output during the specified period.

Expected Growth in the Second Half of the Year

Despite the contraction observed in the second quarter, the IMF anticipates a turnaround in the Irish economy in the latter part of the year. The forecast suggests that growth is expected to pick up during the second half of the year. Various factors, such as improved export performance and a potential recovery in domestic demand, are expected to contribute to this positive outlook.

Gradual Return to Profitability for Irish Banks

The IMF’s review also examined the performance of Irish banks. It was found that the banks have been gradually returning to profitability, indicating an improvement in their financial health. This positive trend suggests that the banking sector is making progress in recovering from the previous financial crisis and the subsequent bailout. However, it is important to note that the recovery process is ongoing and may require continued vigilance and prudent management.

Non-Performing Loans and Loan Portfolios

Despite the positive developments, Irish banks still face challenges in their loan portfolios. The review revealed that non-performing loans account for approximately 26.5% of the banks’ total loan portfolios. Non-performing loans are loans on which the borrower is not making timely payments or has defaulted altogether. This highlights the need for ongoing efforts to address and reduce the level of non-performing loans, as they can have implications for the banks’ stability and overall financial health.

In conclusion, the IMF has completed its 11th review of Ireland’s bailout programme and approved the release of further funding. Although the Irish economy experienced a contraction in the second quarter, it is expected to rebound and show growth in the second half of the year. The banking sector has shown signs of improvement, with banks gradually returning to profitability. However, the presence of non-performing loans remains a challenge that requires ongoing attention and resolution. Overall, these developments underscore the importance of continued efforts to ensure the stability and sustainable growth of the Irish economy.

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Karina Corbett