International authorities overseeing Ireland's bailout praised the country for "steadfastly" following a prescribed reform program and hitting benchmarks for government finances, making an urgent effort to distinguish Ireland from its more-troubled peer Greece.
In a quarterly progress report issued Thursday, inspectors from the European Union, the European Central Bank and the International Monetary Fund said Ireland was successfully closing a huge budget deficit and cleaning up the remains of a shattered banking system.
"There was no target that was not met," István Székely, the official in charge of Ireland for the EU's European Commission said at a Dublin news conference.
Ireland has a hard road ahead—the bill from the bank rescue is staggering—but the officials took pains to laud Ireland and blame much of the financial markets' current pessimism about the country on the unsettled situation in Greece and in the wider euro zone.
Despite months of debate, European leaders have been unable to agree on how to continue funding Greece. The primary split is over whether a significant part of the Greek burden should be placed on the shoulders of Greece's private-sector creditors or whether European taxpayers and the IMF should continue to bear all of the country's financial needs.
"What we need and what is lacking so far is a European solution to a European problem," said Ajai Chopra, the IMF's senior official on Ireland. "What is critical now is for Europe to dispel the uncertainty that is being created."
Mr. Chopra and other officials argued that Ireland is feeling the side effects of the Greek deadlock.
He had tough words for ratings companies that have downgraded Irish debt, saying they "got it wrong" by being overly optimistic during the boom and were now possibly "wrong on the downside." Moody's Investors Service cut Ireland to junk status Tuesday, drawing condemnation from the Irish government and European authorities. Irish Finance Minister Michael Noonan reiterated criticism of Moody's on Thursday but said the rating had little immediate consequence.
But Istvan Szekely, the EC's country director for Ireland, said if Ireland needed more official assistance it could be achieved without private sector participation because, unlike Greece, Ireland's public sector debt is manageable.
"Our position is that public debt in Ireland is sustainable so that is not a relevant question at this stage," he said.
FUNDING HURDLE IN JAN 2014
Irish Finance Minister Michael Noonan said on Thursday that the escalation of the euro zone debt crisis to the currency bloc's core was a game-changer and European leaders would meet in the coming days and weeks to address the crisis.
"For the first time since I became minister it is quite clear that everyone around the table in Ecofin now is seeing the problem as a European problem and as a euro problem rather than, or in addition to, the problems of the individual programme counties," Noonan told a separate news conference.
"Obviously there will be a heads of government meeting sometime in the days and weeks ahead."
With continuing disagreement within Europe over how and when to grant Greece further aid, officials are struggling to even set a date for leaders to meet to agree a way forward, raising fears financial markets might exploit a policy vacuum with a new onslaught on the bloc's high debtors.
Noonan told reporters that Ireland was determined to test debt markets in 2012 and said Dublin probably had enough funding until its existing bailout runs out at the end of 2013.
He admitted however, that Ireland would face a big hurdle in January 2014 when it needs to repay nearly 12 billion euros in debt. (Writing by Carmel Crimmins; Editing by Susan Fenton)
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