Ireland's extensive support for its banks has been vital to maintaining financial stability, the International Monetary Fund said on Thursday, as ratings agencies praised decisions taken by the country's "bad bank" this week. An IMF spokesman said the first transfer of assets from banks to Ireland's "bad bank" represented an important step in the country's recovery, while ratings firms said it made the course the government's debt will take clearer.
He said Fitch's AA- rating on Ireland with a stable outlook was increasingly proving to be appropriate, and that recent decisions had not changed that outlook. Fellow ratings firm Moody's said it was closer to deciding the level in the Aa range where Ireland's rating would settle, describing the bad bank's impact on its AA1 mark on negative outlook as a "balancing act" dependent on economic recovery.
Fitch's Pryce added that it was absolutely essential Dublin continued to aggressively follow its programme of budgetary cuts which have helped Ireland to win back investor confidence compared with other heavily-indebted euro zone members. Ireland's "bad bank", the National Asset Management Agency (NAMA), this week started buying property loans from banks at a higher discount than expected and Dublin told participants to find up to 32 billion euros ($43.16 billion) of capital to make up for the writedowns.
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