The new IMF Country Report is available here. A transcript of yesterday’s conference call following the release of the report is also available (see here). Dan O’Brien provides analysis here. Update: Additional analyses from Colm McCarthy (see here) and Cliff Taylor (article; SBP editorial).
It is encouraging that both the IMF and the European Commission are impressed with the government’s implementation of the programme. The unavoidable fact remains, however, that bond markets are unconvinced on Ireland’s long-term creditworthiness. Not too surprisingly, the IMF is more willing to be critical of Europe’s approach to resolving the crisis. It is becoming increasingly evident that uncertainty about the evolving balance between bailouts and bail-ins is making investors shun Irish bonds. The critical challenge is to convince investors to provide new funds to Ireland, which is now being hampered by fears of being caught up in any future bail-ins. It is also interesting that the European Commission is more open than the IMF to a modest speeding up of the fiscal adjustment. This could be viewed as a high-return investment in reinforcing the credibility of the government’s capacity to see through the necessary adjustments, which already differentiates Ireland from Greece and probably Portugal.