Ireland’s bonds have been the second-best-performing in the eurozone in 2012, with yields dropping, but Michael Saunders, Citigroup’s head of European economics in London, says that the country’s hopes to avoid debt restructuring by raising money in the markets are premature.
Bloomberg reported Thursday that despite Ireland’s progress in the bond markets—it sold bonds in July on the longer-term markets for the first time in nearly two years—Saunders said that there were still troubled times to come.
“Ireland faces an almost impossible task to get back to fiscal balance,” he said in the report. Visits to Ireland proved that “life is tough, very tough and not getting that much better anytime soon,” he added.
Ireland’s debt has more than tripled in the past five years, and Saunders warned that a slower economic recovery could make that debt unsustainable. He had said earlier in the week, “The key risk is the economy. If it doesn’t come right, and I don’t believe it will, then the math becomes difficult.”
Ireland has diligently worked on its deficit through tough austerity measures. Alberto Gallo, head of European credit research at Royal Bank of Scotland Group in London, said in the report, “Ireland is still the good student.” He added, “Ireland is making good progress on reform and fiscal measures.”