The success of Ireland's international bailout hinges on it getting more European support and there being economic recovery externally, the International Monetary Fund (IMF) said on Monday as it cut its growth forecast for Ireland for next year.

Euro zone leaders agreed at their summit in June to look at improving Ireland's bank rescue, a commitment that has pushed Irish bond yields down sharply and allowed Dublin to raise long-term debt for the first time since it secured the EU/IMF bailout almost two years ago.

Ireland wants the terms tied to 31 billion euros of IOUs pumped into two failed banks eased and Europe's rescue funds to take over its stakes in other lenders, something the IMF said was needed to put the rescue programme "on a clear path to successful completion".

"When implemented, recent European commitments could decisively improve program prospects... Success hinges on external economic recovery and more European support," the IMF said in its latest report on Ireland's bailout progress.

"Timely commitment to such a strengthening of European support, especially ESM investments in the equity of Irish banks, therefore offers real prospects for Ireland to exit its reliance on official financing, which would be a positive breakthrough in the euro area crisis."

While again praising Dublin for the "vigorous" policy implementation that has made it the toast of Europe's bailed out countries, the IMF noted that a deterioration in economic conditions outside of Ireland would hamper its growth prospects for this year and next.

News: The Daily Star/Bangladesh/11-Sep-12