Considerable structural and financial reforms are still needed in Ireland to quash any lingering doubts about the country's debt sustainability, European Central Bank (ECB) Executive Board member Joerg Asmussen said on Thursday.
Asmussen said Dublin's EU/IMF programme was on track but that like the rest of Europe, fiscal consolidation and growth enhancing structural reforms were needed for Ireland to remain competitive in the global marketplace.
So far Ireland has delivered, I am confident it can be a 'success story', Asmussen said in a speech, adding that he was truly impressed with how Ireland has handled its tough challenges.
Nonetheless, substantial challenges remain. Ambitious structural and financial reforms are still needed... The Irish government has the capacity to further consolidate and implement the necessary reforms, so that there will be no lingering doubts about the sustainability of government debt.
Ahead of Ireland's referendum on the European Union's new fiscal treaty next month, Asmussen said it was of utmost importance that all euro area countries implement the new rules and that ultimately further steps towards a fiscal union were needed.
Echoing comments made earlier on Thursday, the German central banker said the ECB stood ready to work with Dublin on proposals to reorganise payments on 27 billion euros worth of high-interest IOUs issued to prop up two failed Irish banks.
However he said Irish hopes of replacing the so-called 'promissory notes' for loans backed by Europe's temporary bailout fund, the European Financial Stability Facility (EFSF), would have to meet strict criteria.
To replace the promissory notes with support from the EFSF must meet important criteria, including that it should improve the chances of both the state and the banks returning to market-based funding, and of the banks reducing their extraordinary reliance on the Eurosystem, he said.
(Reporting by Padraic Halpin; editing by Patrick Graham)