Ireland is on its way back, and it wants the world to know it.
Recovery for the country that sought an international bailout in November of 2010 has not been without its bumps and bruises along the way, however, and setbacks are still surfacing. However, the picture is much brighter than it was after the global financial crisis brought the Celtic Tiger to its knees.
The release of asset review tests by Ireland’s Central Bank brought mixed news at the beginning of December, but the country that had to seek a bailout of 67.5 billion euros ($91 billion) from the “troika” of the International Monetary Fund, the European Central Bank and the European Union not so very long ago is set to exit that bailout in mid-month, and it plans on doing so without a safety net. The country has not sought a prearranged credit line as a backstop for its reentry into capital markets, banking (literally) on being able to fight its own way clear of remaining money troubles by the sale of bonds on international markets.
The Irish government pointed to the proceeds of recent bond sales as reserves that it can call upon if necessary to meet upcoming payments and funding costs till 2015. Securing a credit line would have meant surrendering to additional conditions, something the country was not anxious to do, particularly after the hardships it has endured during the austerity program demanded as one of the conditions of its bailout.
As a display of confidence in its own ability to grow its way out of the problem, it’s a grand one. Prime Minister Enda Kenny told the Irish Parliament, “This is the right decision for Ireland, and now is the right time to take this decision. This is the latest in a series of steps to return Ireland to normal economic, budgetary and funding conditions.” And Ireland has certainly performed the best of the four bailed-out countries; its partners in misery have been Greece, Spain and Portugal.
But it remains to be seen how successful Ireland will be, with the eurozone’s economy still floundering, Germany’s slowing, and problems continuing within its own borders. Bank of Ireland is in talks with the country’s Central Bank over the results of its asset review test, which the latter says shows the former coming up several hundred million euros short on required capitalization reserves. Still, the test is seen as a precursor to stress tests to come later for eurozone banks, and possibly that has contributed to a more harsh assessment than would otherwise be made.