Performance of the Irish financial assistance programme

Ireland went into recession in 2008, after a decade of strong economic growth. Imprudent fiscal policies in the run-up to the crisis resulted in a large deficit when cyclical and asset-related revenues disappeared. At the same time, the banking sector was undergoing a severe crisis and needed significant support. A sovereign debt crisis started to unfold. As a result, Ireland requested financial assistance from the EU and the IMF. This was granted in December 2010, accompanied by an economic adjustment programme, the key objectives of which were to restore financial market confidence in the Irish banking sector and sovereign, and allow Ireland to make a sustained return to the markets. While the Ä85 billion financial envelope bought time, the programme was designed to restore the viability of the financial system and the sustainability of public finances, and introduce reforms that would support growth and stability over the medium term. The European Commission has recently finalised an ex post evaluation of the economic adjustment programme. It found that the financial envelope had proven sufficient to meet Irelandís financing needs until it regained market access at sustainable rates. Measures to redress the financial sector, bring public finances back to a sustainable path and support growth were broadly appropriate and effective. The economy has returned to robust growth, unemployment is decreasing and productivity and cost-competitiveness have improved. While challenges remain in addressing the legacies of the crisis, the programme can be seen as a success.