## Press Release: IMF Executive Board Approves €22.5 Billion Extended Arrangement for Ireland

_IMF News, December 16, 2010_

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## Bibliographic details
- Published: December 16, 2010

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### Executive summary
- The Executive Board approved a three-year Extended Fund Facility (EFF) arrangement for Ireland to support the authorities’ economic adjustment and financial stabilization program.
- The Fund arrangement amounts to SDR 19.5 billion (about €22.5 billion; or US$30.1 billion), or the equivalent of about 2,322 percent of Ireland’s IMF quota.
- The arrangement is part of a total financing package amounting to €85 billion (about US$113 billion) from European partners and Ireland’s own contributions.
- The EFF approval was granted under the Fund's exceptional access policy and fast-track Emergency Financing Mechanism procedures; SDR 5 billion (about €5.8 billion) is immediately available to Ireland from the IMF.

### Financing package and composition
- Total financing package: €85 billion (about US$113 billion).
- European lenders (EFSM, EFSF and bilateral European lenders) will provide: €45 billion (about US$60 billion) on similar maturities as the IMF’s EFF.
- Ireland’s own contribution from cash reserves and liquid assets: €17.5 billion.
- IMF contribution: SDR 19.5 billion (about €22.5 billion; or US$30.1 billion), representing about 2,322 percent of quota.
- Immediate IMF disbursement following Executive Board action: SDR 5 billion (about €5.8 billion).

### Policy objectives and program focus
- Main objectives:
  - Restore Ireland’s banking system to health.
  - Put public finances on a sound footing.
  - Reclaim strong, sustained growth and job creation.
- Program priorities:
  - Fundamental restructuring of the banking sector, entailing extensive deleveraging and reorganization and higher capital adequacy standards.
  - The National Recovery Plan as the basis for the 2011 budget and fiscal consolidation through 2014.
  - Address structural impediments to competitiveness and the business environment to support growth.
  - Institutional reforms: a special resolution regime for banks, stronger supervision, and enhanced budgetary oversight.
  - Large external financial assistance to manage transition and reestablish policy credibility.

### Recent economic developments (as presented in the Annex)
- Core challenge: a critically-weakened banking sector that has yet to be restored to health and stands at the center of a negative dynamic impeding recovery and creating fiscal challenges.
- Measures already taken:
  - National Asset Management Agency taking over banks’ land and property development assets.
  - Substantial capital injections and sovereign guarantees to reassure creditors.
- Remaining vulnerabilities:
  - Market pressures on large rollover needs threatening banking system solvency and placing severe burden on sovereign finances.
  - Fall in domestic consumer and international investor confidence, with adverse implications for growth and the cost of funding.
- Fiscal situation:
  - Public finances weighed down by a deep structural deficit, commitments to bank support, and weak growth.
  - Public debt projected to end up close to 100 percent of GDP by end-2010.
  - Authorities’ fiscal consolidation plan includes another €15 billion in consolidation measures over 2011–14, equivalent to 9 percent of GDP.

### Program implementation strategy and measures
- Banking sector strategy:
  - Downsize and fundamentally restructure the banking sector to emerge smaller, more robust, and better-capitalized.
  - Maintain higher capital adequacy standards to minimize market perceptions of weakness and improve access to funding.
  - Special resolution scheme for deposit-taking institutions and further strengthening of supervisory system.
- Fiscal and institutional strategy:
  - National Recovery Plan to guide fiscal consolidation and protect social safety nets.
  - Reform budget formation processes to safeguard fiscal gains.
  - Institutional reform to improve shock-absorbing capacity of the economy.
- Growth and structural reforms:
  - Remove structural impediments to enhance competitiveness and create employment opportunities.
  - Further reforms to improve the economy’s efficiency and growth potential.

### Expected outcomes and rationale
- Stability generated by reforms, improved competitiveness, and increased credit flows is expected to underpin a return of confidence and improved employment and growth prospects.
- The EFF is designed to ensure a realistic repayment schedule consistent with the time needed for an orderly banking overhaul and broader structural reforms.

### Notable quotations
- Dominique Strauss-Kahn: “The Irish authorities have designed an ambitious policy package to address the economic crisis facing the nation. It is a multi-year program targeting vulnerabilities in the banking system and aiming to restore prospects for growth—without which there can be no enduring solution to the crisis. The authorities designed a program with fairness in mind so that the burden of economic and financial adjustment is shared across all levels of society, with the most vulnerable groups the most protected.”
- On the financing package and repayment: “A financing package of €85 billion (about US$113 billion) will support the comprehensive set of policies. Of this, the European Union and bilateral European lenders have pledged a total of €45 billion (about US$60 billion). The Irish authorities are to contribute €17.5 billion from the nation’s cash reserves and other liquid assets. The IMF contribution would be through a three-year SDR 19.5 billion (about €22.5 billion; or US$30.1 billion) loan, representing about 2,322 percent of quota, under the Extended Fund Facility (EFF). The EFF ensures a realistic repayment schedule, given the time needed to complete an orderly overhaul of the banking system and broader structural reforms”.

### Background facts
- Ireland became a member of the IMF on August 8, 1957.
- Ireland’s IMF quota: SDR 838.40 million.

*Press Release No. 10/496, December 16, 2010.*

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## References

- [Ireland and the IMF](http://www.imf.org/external/country/IRL/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Approves €22.5 Billion Loan For Ireland](https://www.imf.org/external/pubs/ft/survey/so/2010/CAR121610A.htm)
- [Transcript of a Conference Call on the Extended Fund Facility Arrangement for Ireland](https://www.imf.org/external/np/tr/2010/tr121710.htm)
- [Extended Fund Facility](https://www.imf.org/external/np/exr/facts/eff.htm)
- [EFF](https://www.imf.org/external/np/sec/pr/2010/pr10462.htm)
- [http://www.imf.org/external/country/IRL/index.htm](https://www.imf.org/external/country/IRL/index.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10496_