Release of additional €1.7bn in loans to Government under bailout scheme

THE EU powers have cleared the release of another €1.7 billion in emergency loans to the Government under the bailout scheme.

The disbursement brings to some €36.7 billion the total amount of European loans released to Ireland since the EU-IMF-ECB programme began in late 2010.

The latest payment includes €1 billion from the funding stream controlled by the European Financial Stability Facility, owned by euro-zone countries, and the European Financial Stability Mechanism, which is operated by the EU Commission.

A further €700 million comes from the bilateral loan scheme through which Britain, Sweden and Denmark are contributing to the bailout.

The latest payments follow the summer review of the Ireland’s bailout performance by the EU-IMF-ECB “troika” which was carried out in July.

That review, which went to finance ministers last weekend, found the programme is on track despite a challenging domestic and external backdrop.

The commission’s report, details of which were published last month by The Irish Times, said downside risks to the programme have increased, mainly due to “growing headwinds” in the economies of Ireland’s main trading partners. It called for “better targeting of the social support schemes” and said there should be a “further broadening of the tax base”.

This would help mitigate the adverse impact of the necessary consolidation on growth and the most vulnerable, it added.

“More needs to be done to alleviate or eliminate work disincentives and unemployment traps caused by some features of Ireland’s benefits system (eg, the broadly flat and open-ended unemployment benefits that do not diminish with the duration of the unemployment spell) and the recent move to de-couple housing support from unemployment status should be further advanced.”

However, the Commission said growth would depend in the near-to-medium term on export demand and performance.