Irish officials said on Thursday they will exit their international bailout program next month as scheduled, without the need for follow-up financing from the International Monetary Fund or elsewhere — a first step in ending the IMF’s controversial support for the 17-nation euro zone.
“This is the right decision for Ireland, and now is the right time,” Irish leader Enda Kenny told the nation’s parliament.
With a renewed financial buffer, lower borrowing costs and restored credibility in world markets, “like most other sovereign euro-zone countries, from 2014 we will be in a position to fund ourselves normally,” Kenny said.
As of Dec. 15, the IMF will have paid out the last of a $110 billion loan that brought the country back from the brink of financial calamity after a banking collapse saddled the government with bills it could not pay.
The announcement marks a moral victory for Ireland, which has struggled to bring its finances into line and rekindle a semblance of the tech-driven economic growth that led to its “Celtic Tiger” boom.
It is welcome as well for the IMF as it begins extricating itself from a series of tumultuous euro zone bailouts that forced it to retool some of the most basic thinking about the economics of public rescue programs. Since an initial bailout of Greece in 2010, the IMF has battled against the perception that it was at once both too generous in lending money to a wealthy part of the world, and too strict in setting bailout terms that worsened the very economic problems it was meant to address.
The approach changed over time as both the IMF and the leaders of other European nations — Germany in particular — acknowledged that their prescription for fast, deep cuts in public spending hadn’t worked.
To have at least this one bailout project closed on time and without complication “bodes well,” IMF Managing Director Christine Lagarde said in an e-mailed statement. “Ireland is in a strong position.”
It’s not, however, in the midst of a new boom — nor is there much hope it will be pulled along by a resurgent euro zone.
New data from the Eurostat statistics agency released on Thursday showed the currency bloc grew just 0.1 percent over the past three months — a discouraging outcome after predictions the region was beginning to rebound from a long recession.
The data, which included small contractions in nations such as France and Italy and a slowdown in German growth as well, are a counterweight to a U.S. recovery that many analysts expect to gather steam in coming months. If Europe remains stagnant or slips back into recession, it could cut the demand for U.S. exports and temper the flow of investment.
The region is struggling for ways to boost employment, revive its banking sector and stave off a slide toward more acute problems: in recent weeks analysts have revived the fear of deflation — a dangerous and self-reinforcing slide in prices — and a downgrade in France’s credit rating this week showed the potential fragility of even the region’s larger and strong nations.
The IMF, meanwhile, is still tending three other direct euro-zone bailouts — a Portuguese program that is due to end next year, a more recent one in Cyprus that runs until 2016 and a program in Greece that began in 2010 but has been extended from the usual three years to run until 2016.