{
  "title": "Ireland: Ex Post Evaluation of Exceptional Access Under the 2010 Extended Arrangement",
  "publication": "IMF Staff Country Reports, January 29, 2015",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2016/12/31/ireland-ex-post-evaluation-of-exceptional-access-under-the-2010-extended-arrangement-42656",
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  "summary": "This paper presents an Ex Post Evaluation of the 2010 Extended Fund Facility (EFF) arrangement with Ireland. The Fund approved in December 2010 an exceptional access EFF arrangement for SDR 19.466 billion (2,321.",
  "sections": [
    {
      "heading": "Program overview and objectives",
      "content": "- The Fund approved in December 2010 an exceptional access EFF arrangement for SDR 19.466 billion (2,321.8 percent of quota).\n- Arrangement supported Ireland’s home-grown program and formed part of a broader financing package with Ireland’s European partners.\n- Program focused on addressing the Irish banking crisis to break the adverse feedback loop between banks, the sovereign, and the real sector.\n- Key aims:\n  - Restore the banking system to health, including by establishing a smaller banking sector with high capital buffers and more stable funding sources.\n  - Secure fiscal sustainability while limiting the near-term demand drag from fiscal consolidation.\n  - Large external financing was a key element of the crisis response."
    },
    {
      "heading": "Implementation and outcomes",
      "content": "- Program implementation was very strong.\n- Outcomes achieved:\n  - Stabilized the banking sector and reduced its size.\n  - Fiscal developments were broadly as anticipated.\n  - Regained market access at low interest rates, with program success also benefiting from actions at the wider euro area level.\n- Areas where outcomes diverged from program projections:\n  - Domestic demand was weaker than programmed.\n  - Unemployment remained high amid a very challenging external environment."
    },
    {
      "heading": "Lessons — what worked well",
      "content": "- Strong country ownership was critical.\n- Setting (and meeting) realistic and tailored targets mattered for success.\n- Effective communication and pro-active engagement supported program implementation.\n- Addressing a banking crisis requires strong and credible actions upfront."
    },
    {
      "heading": "Lessons for future program design",
      "content": "- While the main pillars of the financial sector program were sound, the evaluation highlights several areas for stronger design and implementation:\n  - More proactive and stronger supervisory interventions and other supportive steps could have strengthened banks’ balance sheets and bank profitability and helped resolve problem loans.\n  - Bank recapitalization should be limited to those with viable medium-term business strategies.\n  - Unsecured and non-guaranteed creditors of failed banks should be bailed in, provided a strategy to ring fence potential systemic risks can be put in place.\n  - Macro-financial linkages require careful attention and timely steps to limit sovereign–banking sector feedback loops.\n  - Fiscal policy must be mindful of debt sustainability but also of domestic demand conditions, and it needs a clear anchor."
    },
    {
      "heading": "Lessons related to Fund policies",
      "content": "- Ireland’s EFF underscores the importance of addressing shortcomings of the systemic exemption clause in Criterion 2 of the exceptional access criteria.\n- The case suggests the need to explore ways to secure stronger upfront commitments from monetary union authorities when those commitments are critical for program success.\n\nInternational Monetary Fund. \"Ireland: Ex Post Evaluation of Exceptional Access Under the 2010 Extended Arrangement\", IMF Staff Country Reports 2015, 020 (2015).\n\n---\n\n Content in this bundle\n\n- cr1520\n  - cr1520 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - cr1520 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: January 29, 2015",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498359733.002",
    "The Fund approved in December 2010 an exceptional access EFF arrangement for SDR 19.466 billion (2,321.8 percent of quota).",
    "Arrangement supported Ireland’s home-grown program and formed part of a broader financing package with Ireland’s European partners.",
    "Program focused on addressing the Irish banking crisis to break the adverse feedback loop between banks, the sovereign, and the real sector.",
    "Key aims:",
    "Program implementation was very strong.",
    "Outcomes achieved:",
    "Areas where outcomes diverged from program projections:",
    "Strong country ownership was critical.",
    "Setting (and meeting) realistic and tailored targets mattered for success.",
    "Effective communication and pro-active engagement supported program implementation.",
    "Addressing a banking crisis requires strong and credible actions upfront.",
    "While the main pillars of the financial sector program were sound, the evaluation highlights several areas for stronger design and implementation:",
    "Ireland’s EFF underscores the importance of addressing shortcomings of the systemic exemption clause in Criterion 2 of the exceptional access criteria.",
    "The case suggests the need to explore ways to secure stronger upfront commitments from monetary union authorities when those commitments are critical for program success.",
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