Ireland confident on deficit target, bailout exit

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By Laura Noonan | February 21, 2013 3:42 AM EST

Ireland is confident of beating its budget deficit target this year and emerging from an EU/IMF bailout that it is currently 60 to 70 percent of the way to exiting, its finance minister, Michael Noonan, said on Wednesday.

Ireland, which became the second euro zone country to be bailed out in November 2010, is gradually returning to regular market funding and further paved the way to a speedy bailout exit when it struck a key bank debt deal earlier this month.

Noonan said he was "absolutely confident" Ireland could get off emergency European Union and International Monetary Fund support on schedule at the end of this year but repeated that he needed more help from his colleagues in Europe to ensure that once Ireland is out, "it stays out".

"We're about 60, 70 percent of the way there if you were marking us on exiting the programme," Noonan told an event at the start of a two-day trip to London, ahead of talks with his British counterpart George Osborne as well as investors.

"We're getting there but we need further arrangements on the sustainability of the debt and we're negotiating those. We're reasonably confident that we will put those arrangements in place and exit the programme."

"I want to make sure (that when we get out) we're out for good, that's why I want to negotiate other pieces of the debt... If something untoward happens in some other European country, in the proximity of Europe, and it drags us back again, I don't want to be in that position."

Ireland and fellow bailout recipient Portugal asked euro zone finance ministers last month to extend the repayment of part of their loans, while Dublin also hopes Europe's new rescue fund will take stakes in its almost fully state-owned banking sector off its hands next year if it's permitted to do so.

Dublin also received bi-lateral loans from Britain, Sweden and Denmark as part of its bailout package and Noonan said the maturities on Britain's £3.2 billion ($4.94 billion) loan would be mentioned in his meeting with Osborn, but not pressed hard.

Ireland, which has begun to cut some of its exposure to its ailing banks, has been widely praised for its adherence to the terms of its 85 billion euro ($113 billion) bailout and has beaten deficit targets for the last two years set as part of those strict terms.

The government trimmed the gap between its revenue and spending to below 8 percent of gross domestic product last year - still among the highest in Europe - and Noonan said he was confident of beating the 7.5 percent for this year.

The recent bank debt deal will also ease the deficit path from next year and prompted Noonan and Prime Minister Enda Kenny to promise voters a 20 percent reduction in the 5.1 billion euros of austerity measures planned by 2015.

However Noonan cautioned on Wednesday that it was too soon to say for sure what the leeway would mean for next year's budget.

"To reach our targets we have a billion less to do in terms of expenditure cuts and tax increases, where I will apply that, if I'm finance minister during that period, has still to be decided," he said.

"The billion euro is available to use between now and 2015. For 2014, we're only towards the middle of February and there are so many variables that could occur between now and the end of the year I'm not prepared to predict."

(Reporting by Laura Noonan, Writing by Padraic Halpin, Editing by Jeremy Gaunt)

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