Ireland to go it alone after bailout exit

DUBLIN (AFP) - Ireland will stand on its own two feet when it becomes the first eurozone nation to exit a bailout after the government on Thursday refused a precautionary credit facility.

The Department of Finance said that it would not need a backstop when on December 15 it exits its EU-IMF bailout programme that has been worth 85 billion euros (S$142 billion) to the small island country.

Ireland said it was able to go it alone owing to large state cash reserves and public finances that are under control amid a climate of historically-low Irish government bond yields.

"Following a careful and thorough assessment of all of the available options... the Irish government has today decided that Ireland will exit the EU/IMF programme in December as planned and without a pre-arranged precautionary credit facility," the statement said.

Ireland last week passed a final stringent review by the European Union and International Monetary Fund.

That left Dublin to decide whether a precautionary credit line, or insurance fund, was needed in case market conditions become unfavourable once it exits the bailout safety net.

"The Irish government's assessment is that the best option for Ireland is to exit the programme as planned in December without a pre-arranged backstop," the statement on Thursday said.

"The market and sovereign conditions are favourable towards Ireland with the country returning to the markets in 2012, holding over 20 billion euros in cash reserves at year end which we can use to ensure that we can meet our maturing commitments and funding costs till early 2015 and (with) Irish sovereign bond yields at historically low levels.

By declining a precautionary credit line Ireland is giving up possible intervention on the bond market by the European Central Bank to support Irish debt costs.

IMF Managing Director Christine Lagarde said "Ireland is in a strong position in terms of its bond yields and has built a sizable cash buffer".

EU Economic Affairs Commissioner Olli Rehn said Ireland's announcement "provides clear evidence that determined implementation of a comprehensive reform agenda can decisively turn around a country's economic fortunes and put it back on a path of sustainable growth and rising employment."