The Executive Board of the International Monetary Fund (IMF) today approved a three-year Extended Fund Facility (EFF) arrangement for Ireland to support the authorities' economic adjustment and financial stabilisation programme.
The EFSM, EFSF and bilateral European lenders will provide €45 billion on similar maturities as the IMF’s EFF. The Irish authorities will round out the total financing package through a contribution amounting to €17.5 billion from the nation’s cash reserves and liquid assets. European Central Bank liquidity support is also an essential component of the overall economic and financial programme.
“The Irish authorities have designed an ambitious policy package to address the economic crisis facing the nation”, IMF Managing Director Dominique Strauss-Kahn stated. “It is a multi-year programme targeting vulnerabilities in the banking system and aiming to restore prospects for growth—without which there can be no enduring solution to the crisis. The authorities designed a programme with fairness in mind so that the burden of economic and financial adjustment is shared across all levels of society, with the most vulnerable groups the most protected.”
Exceptional financial assistance from the IMF and Europe will support the authorities’ efforts by providing sufficient financial resources to allow time for Ireland to restore market confidence and foster renewed growth and job creation, Mr Strauss-Kahn noted. The extended arrangement under the EFF for Ireland was approved under the Fund's exceptional access policy and fast-track Emergency Financing Mechanism procedures. As a result of the IMF Executive Board action, SDR 5 billion (about €5.8 billion) is immediately available to Ireland from the IMF.
Following the Executive Board’s action on Ireland, Mr Strauss-Kahn, who also serves as Chairman of the Board, stated: “The Irish economy faces a crisis without parallel in its recent history. The new programme, building on the authorities’ recent efforts, steps up the pace and range of measures to address financial and fiscal stability concerns. A clear and realistic package of policies is set in a multi-year policy framework to restore Ireland’s banking system to health, place its public finances on a sound footing, and reclaim growth. The strategy for the financial system rests on twin pillars: deleveraging and reorganisation; and ample capitalisation. In addition, structural measures—a special resolution scheme for deposit-taking institutions and a further strengthening of the supervisory system—will enhance stability. The National Recovery Plan forms the basis for the 2011 budget and also details fiscal consolidation measures through 2014. The fiscal plan makes pragmatic choices, and maintains Ireland's due regard to a social safety net. The process of budget formation will be reformed to safeguard these gains. To restore strong, sustainable growth, the programme includes a strategy to remove potential structural impediments to enhancing competitiveness and creating new employment opportunities.“
A financing package of €85 billion will support the comprehensive set of policies. Of this, the European Union and bilateral European lenders have pledged a total of €45 billion. The Irish authorities are to contribute €17.5 billion from the nation’s cash reserves and other liquid assets. The IMF contribution would be through a three-year €22.5 billion loan, representing about 2,322 per cent of quota, under the Extended Fund Facility (EFF). The EFF ensures a realistic repayment schedule, given the time needed to complete an orderly overhaul of the banking system and broader structural reforms.
Press release
© International Monetary Fund
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