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Spain, Ireland To Exit Bailout


Spain and Ireland are set for clean exits from their rescue programmes as the stringent and structural reforms initiated by the governments finally pay off.

The strong commitment towards the implementation of bailout conditions has shown results, Jeroen Dijsselbloem, who presided the Eurogoup meeting said late Thursday. "Both economies are back on the road to recovery," he added.

The Spanish banking sector has improved significantly, including gaining of access to funding markets. The improvement in the regulatory and supervisory framework is expected to increase the resilience of the sector, Eurozone finance ministers said at the gathering in Brussels.

"We are fully supportive of Spain's decision not to request any successor ESM financial assistance following the programme exit in January 2014," Eurogroup said in a statement.

But ministers called for continuous measures to address high unemployment and the vulnerabilities stemming from the still high private and external debt.

Last year, Spain took EUR 41 billion from a EUR 100 billion credit line to recapitalize its banks after Spanish banks were pushed to the brink of a collapse due to their high exposure to the property market.

The three-year credit line worth EUR 85 billion for Ireland will end on December 15. Eurozone ministers noted that Irish banks have enjoyed better funding conditions and improved market access.

"We will exit the bailout in a strong position," Prime Minister Enda Kenny said. The government has been preparing for a return to normal economic and funding conditions, he told lawmakers in Dublin.

Spain and Ireland are living example that EU-IMF adjustment programmes are successful provided there is a strong ownership and genuine commitment to reforms, the Eurogroup said.

With the official exit of Spain and Ireland from the emergency funding, the remaining economies on life-support mechanism are Greece, Portugal and Cyprus.

Finance ministers also discussed the banking union, the progress on the Cyprus financial sector and additional reforms required in Greece. The job is not yet done in Greece, said Dijsselbloem.

Ministers will focus on euro area fiscal surveillance and draft budgetary plans at their upcoming meeting next week.

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