(Reuters) – Ireland will become the first euro zone country to exit an international bailout in mid-December and may do so without a financing backstop from its European partners, the ruling party announced at a triumphant rally on Saturday.
Prime Minister Enda Kenny told a gathering of his Fine Gael party that “the economic emergency will be over” when the country exits its 85 billion euro bailout on December 15, confirming the official date of the exit for the first time.
“There’s still a long way to go. But at last, the era of the bailout will be no more,” Kenny said to loud applause.
Earlier, Finance Minister Michael Noonan gave the clearest signal yet the country may exit without the insurance policy of a precautionary credit line and said he expected to comfortably beat EU deficit targets next year.
Refusing to take a precautionary credit line would block Ireland from accessing the European Central Bank’s as-yet-unused Outright Monetary Transactions (OMT) program of government bond purchases.
But it would also reduce the conditions and close monitoring from European officials and bolster the government’s claim to have restored the country’s economic sovereignty lost by the previous government.
“Two years ago, I addressed the Irish people and said that I wanted to be the taoiseach who would retrieve our economic sovereignty and independence,” said Kenny, using the Irish term for prime minister.
“This goal is now within our grasp,” he said.
Left-leaning opposition party Sinn Fein criticized Kenny as celebrating prematurely and said he was out of touch by suggesting that the austerity of the past three years was working for Ireland.
“Try telling families at risk of losing their homes that austerity is working,” Sinn Fein leader Gerry Adams said in a statement. “Try telling the 415,000 people on the live (unemployment) register or the 300,000 that have emigrated in the last four years.”
The coalition government of Fine Gael and the left-leaning Labour Party is due to release a budget next week that will cut the budget deficit by a third and contain a 2.5 billion euro package of spending cuts and tax hikes, less than the 3.1 billion euro package originally planned.
The budget deficit will fall to 4.8 percent next year from 7.3 percent in 2013, well within targets agreed with the EU, Noonan said. The economy will grow 0.2 percent this year before bouncing back to growth of 1.8 percent in 2014, his department said this week.
The finance minister’s suggestion that Ireland may pass on a precautionary credit line came a day after EU Economic and Monetary Affairs Commissioner Olli Rehn said Ireland had a “very good chance” of exiting its bailout without one.
The government had said last month it would seek a 10 billion euro ($14 billion) precautionary credit line from the euro zone to insulate it against market shocks.
“IMF countries that exited bailout programs in the past had a kind of precautionary program attached … but we have a very significant backstop because the NTMA (national debt agency) is carrying cash buffers of about 25 billion euros,” Noonan said in a speech to the conference.
“The cash buffers have given us the kind of backstop that we need,” he said.
The National Treasury Management Agency said last week it would not tap bond markets in the final quarter of the year, a move that may slow Ireland’s return to the “regular market access” it would need to access the OMT. ($1 = 0.7373 euros)
(Reporting by Conor Humphries; Editing by Ron Askew and Peter Cooney)