Ireland has met the reform targets set by its creditors through June of 2012. In turn, the IMF has transferred a new bailout tranche to Dublin, amid calls for direct EU investment in Ireland's banking sector.
The International Monetary Fund (IMF) released 920 million euros ($1.5 billion) in bailout money to Ireland on Wednesday, after confirming that Dublin had met all of its economic reform targets through the end of June 2012.
The bailout tranche is part of Ireland's 85-billion-euro rescue package, backed by the European Union, IMF, Britain, Sweden and Denmark. Dublin applied for the bailout in 2010, after the government intervened to rescue the country's failing banking sector, which had been brought to its knees by a burst real estate bubble.
"Despite considerable headwinds from an adverse global economic outlook and the ongoing euro area crisis, the Irish authorities have pressed forward with implementing their economic program," the IMF said in a release.
Calls for ESM support
Unlike other indebted eurozone crisis countries such as Greece, Ireland returned to the sovereign bond market in July, raising some 5.23 billion euros in its first bond sale in two years. The yields on Irish treasury bills have fallen sharply, with Dublin hoping to finance itself entirely from the bond market by 2014.
The deputy managing director of the IMF, David Lipton, called for the European Union to help alleviate the burden on the Irish government's budget deficit by investing directly in the nation's banking sector. The money should come, he said, from the EU's permanent rescue fund, the European Stability Mechanism.
"Ireland's rapid return to market financing…confirms the benefits of steps to improve Ireland's debt sustainability and break the vicious circle between the banks and the sovereign," Lipton said.
"Timely agreement on such steps, especially ESM investments in the equity of Irish banks, offers real prospects for Ireland to durably exit its reliance on official financing, benefiting Europe as well as Ireland," he continued.