Ireland achieves high overall compliance with international standards and codes, with a score of 70.8 out of 100 in our Standards Compliance Index. As a Euro-member country, Ireland's compliance in the areas of macroeconomic fundamentals and financial supervision is high. The exception is insurance supervision, where Ireland's compliance with the revised international standards has not yet been assessed. Ireland also achieves high levels of compliance in the areas of insolvency framework and payment systems, but lags relatively behind in the areas of corporate governance, accounting, and auditing. However, even here, steps are being taken to achieve greater convergence and compliance. Ireland's anti-money laundering legal framework meets high standards, but suffers from weaknesses in oversight and enforcement.

Macroeconomic Policy and Data Transparency

Ireland has been a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) since July 26 1996, and the SDDS website discloses that Ireland meets all requirements for coverage, timeliness, and periodicity, although it does avail itself of the flexibility option for timeliness in reporting national accounts and central government debt data. Ireland provides summary methodologies and posts advance-release dates for all datasets reported to the IMF. The IMF's 2007 Article IV Consultations report deems Ireland's data provision to be adequate for surveillance purposes. More »

Ireland is one of the original euro-zone members. Its monetary policy is thus no longer governed by the Central Bank of Ireland. Rather, the Governing Council of the European Central Bank (ECB) determines Irish monetary policy, and the Eurosystem (consisting of the ECB and the central banks of the member states that have adopted the euro) is responsible for its implementation. According to the International Monetary Fund (IMF), the Eurosystem and the ECB maintain high transparency standards and a commitment to openness. The ECB observes the IMF's codes and standards for monetary policy transparency and pursues an active policy of communication with the public. More »

As a member of the European Union, Ireland is required to participate in the Stability and Growth Pact and is thus subject to intense budget scrutiny. In 2004, the Economic and Financial Committee (EFC) of the EU conducted an assessment of Ireland's compliance with European Monetary Union standards and found some problem areas. In particular, the EFC cited coverage gaps in both the national accounts and quarterly public finance data. However, a 2006 European Commission (EC) report found that the 2005-2008 Stability Program was broadly compliant in both structure and the provision of data. The EC report noted with approval the likelihood that ongoing reforms should continue to improve the efficiency of public spending and enhance transparency. More »

Institutional and market infrastructure

As of 2002, according to the European Commission's (EC) "Best Project on Restructuring, Bankruptcy and a Fresh Start: Final Report of the Expert Group," Ireland has fully adopted seven of the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. It has almost fully adopted 24 principles, and it has partially adopted ten principles. The underlying legislative framework for insolvency in Ireland is, primarily, the 1963 Companies Act with subsequent amendments, which, as stated in the U.S. Department of Commerce's "Doing Business Guide," are "consistently applied by the courts." More »

In line with European Commission (EC) Regulation No. 1606/2002, listed companies in Ireland are required to use International Financial Reporting Standards (IFRSs) in their consolidated accounts. The 2006 EC report on the implementation of this regulation points out that Ireland permits IFRSs in the annual accounts for listed companies and annual and consolidated accounts for all other companies, except for companies "not trading for gain." Companies which choose not to apply IFRSs are required to use accounting standards issued by the United Kingdom Accounting Standards Board (ASB) and its Urgent Issues Task Force (UITF), as promulgated by the Institute of Chartered Accountants in Ireland (ICAI). According to a number of publications on the subject, UK standards differ from IFRSs. However, in March 2004, the ASB released its "Discussion Paper: UK Accounting Standards -- A Strategy for Convergence with IFRS," in which it announced its intention to bring national accounting standards in line with IFRSs to avoid the use of two different sets of accounting rules in the United Kingdom. More »

The flourishing Irish economy and its rapidly growing stock market have attracted greater attention to Ireland's corporate governance framework. The law firm of Weil, Gotshal, and Manges' reported in 2002 that while most of Ireland's company law is based on the United Kingdom's laws, Ireland is becoming increasingly more active in establishing its own legislative and regulatory systems to improve the attractiveness of its business environment. The Organization of Economic Cooperation and Development (OECD) suggests that transferring powers in 2001 to an independent regulator, the Office of the Director of Corporate Enforcement, has improved enforcement. The OECD also notes that Ireland intends to streamline its company code and expects that the business environment will be in compliance with the legal framework. The 2006 International Monetary Fund Financial Systems Stability Assessment Update recommends that Ireland further improve its adherence to best practices in market conduct to enhance corporate governance. More »

The regulations of the Institute of Chartered Accountants in Ireland require auditors in Ireland to follow auditing standards issued by the UK Auditing Practices Board (APB). In December 2004, the APB issued International Standards on Auditing (ISAs) (UK and Ireland) effective for periods commencing on or after December 15, 2004. According to the APB, these national standards are ISAs as issued by the International Audit and Assurance Standards Board (IAASB). Where necessary, the APB has supplemented the international standards with additional standards and guidance. However, in 2005 the IAASB, in order to improve the clarity of the international standards, introduced the 'Clarity Project' which entailed revising/redrafting existing ISAs. The UK and Ireland, as members of the European Union (EU), also must comply with European Commission (EC) Directive 2006/43, which requires by June 29, 2008, all statutory audits to be carried out on the basis of ISAs as adopted by the EC. Per the APB 2006/07 Final Work Program, the APB would not change its existing ISAs (UK and Ireland) until the finalization of the Clarity Project. In the interim, it will continue to work with the IAASB on revising and redrafting the ISAs and on the EU adoption process for member countries. More »

The Financial Action Task Force (FATF), in a 2006 report, summarizes the findings of its 2006 Mutual Evaluation on Ireland's Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime. In this report the FATF notes that the Irish legal structure and international cooperation framework meet high standards. The report, however, observes that statistics regarding AML/CFT investigations, prosecutions, and convictions are not comprehensive. Therefore, the actual implementation of Ireland's AML/CFT laws and regulations could not be properly evaluated by the 2006 FATF team. In its 2006 report, the FATF also indicates that Ireland's terrorist financing legislation is not comprehensive; the Irish Financial Intelligence Unit (FIU) lacks resources to carry out its responsibilities, and the FIU lacks a full range of sanctioning powers. Furthermore, the report notes that customer due diligence requirements are lax, non-profit sector oversight is weak, and a full range of designated non-financial business and professions is not covered by the scope of the AML/CFT laws. The FATF recommends that the Irish Financial Regulator improve its domestic cooperation between the FIU and the Irish Financial regulator. More »

An assessment by the European Central Bank (ECB) in 2004 found Ireland's systemically important payment system, the Irish Real-time Interbank Settlement (IRIS) to be largely compliant with the Core Principles for Systemically Important Payment Systems (CPSIPS) developed by the Committee on Payment and Settlement Systems of the Bank for International Settlements (BIS). The IRIS fully observes seven of the ten Core Principles (CPs), broadly observes two, and CP V is not applicable, since IRIS is a Real Time Gross Settlement system. A 2001 assessment by the International Monetary Fund (IMF) also acknowledged that IRIS observes all CPSIPS. IRIS is the only large value as well as systemically important payment system in Ireland. It commenced operations in March 1997 and is interlinked with the Trans-European Automated Real-time Gross Settlement (TARGET) system. As a participant in the TARGET, IRIS has already been tested under higher standards than many other countries. The Central Bank Act of 1997 provides the statutory basis for the regulatory role of the Central Bank and Financial Services Authority of Ireland (CBFSAI) in supervising the payment and securities settlement systems in the country. The Maastricht Treaty and the statute of the European System of Central Bank (ESCB) also govern the CBFSAI's oversight role. Ireland is expected to migrate to the Euro area payment system, TARGET2, on February 18, 2008. TARGET2 is the successor to TARGET and is a centralized system with a common technical platform which allows it to provide a harmonized level of service for its members. More »

Financial Regulation and Supervision

In 2001, the International Monetary Fund (IMF) released a report on its Financial Sector Assessment Program (FSAP) on Ireland, concluding that Ireland was compliant with all Basel Core Principles (BCPs) for Effective Banking Supervision. Subsequent to this report, in 2003, the banking sector supervisor changed from the Central Bank of Ireland to the Irish Financial Services Regulatory Authority (IFSRA) - a distinct legal entity within the Central Bank and Financial Services Authority of Ireland (CBFSAI). However, a 2006 Update on the FSAP by the IMF notes that the impact of this change in the regulator has been insignificant to the overall banking supervisory process, because the IFSRA is functionally similar to its predecessor. In fact, the 2006 IMF report states that the IFSRA has strengthened banking supervision in several regards such as fit-and-proper testing, and on-and-off site inspections. As in the 2001 report, the IMF's 2006 update also indicates that the main challenge facing banking supervision in Ireland is to maintain the existing high standards in supervision. The 2006 Update and the IMF's 2007 Article IV Consultation report supports the country's transition to Basel II, but it cautions that the IFSRA should closely monitor banks' risk management practices. The one significant recommendation in the 2006 update is to continue to develop the IFSRA's staff resources and expertise, in order to supervise Ireland's increasingly sophisticated financial system. More »

According to the 2006 International Monetary Fund (IMF) Financial System Stability Assessment (FSSA) Update, Ireland has achieved good progress in strengthening the securities regulatory and supervisory environment, in accordance with the recommendations of the IMF 2001 Report on Standards and Codes on Securities Supervision, a component of the 2001 Financial Sector Assessment Program. In particular, a consolidated regulatory framework was created. Before 2003, the supervision and the regulation of securities were the responsibilities of the Central Bank of Ireland. In 2003, the Central Bank and Financial Services Authority of Ireland Act of the same year, charged the Irish Financial Services Regulatory Authority (IFSRA) with regulation of the securities market. The IFSRA is a unified and autonomous regulator, and its purpose is to ensure consumer protection, prudential supervision, and financial stability. However, the 2006 IMF FSSA Update mentions a few areas that could use further improvement, as well as the need for Ireland's regulatory and supervisory framework to adapt to the evolving market conditions. More »

In a 2001 Report on the Observance of Standards and Codes (ROSC), which uses the 1997 International Association of Insurance Supervisors (IAIS) Insurance Supervisory Principles (ISPs) as a benchmark for assessing insurance supervision in Ireland, the International Monetary Fund (IMF) concluded that overall Ireland was in "substantial compliance" with the ISPs, although a number of shortcomings were identified. According to a 2006 IMF Financial System Stability Assessment Update, the insurance regulatory framework in Ireland has significantly improved since the original 2001 IMF ROSC. Notable progress has been made in strengthening the on-site and off-site prudential supervision framework. Further, the Ireland Financial Services Regulatory Authority, which is responsible for the supervision of the insurance sector in Ireland, has established guidelines and standards to improve insurers' corporate governance, and has been given powers to exercise regulatory sanctions in the insurance industry. The IMF nevertheless recommends reviewing the current on-site supervisory framework, strengthening the oversight and independence of actuaries, and enhancing public disclosures by insurers. However, given the fact that ISPs were superseded in 2003 by the more demanding Insurance Core Principles (ICPs), as well as the importance of changes expected to take place in Ireland's insurance supervisory framework, the IMF recommends carrying out a formal reassessment of the Ireland's compliance with ICPs. More »

Legend:

Credit Ratings

Moody's Aaa/Stable

Fitch AAA/Stable

Standard & Poor's AAA/Stable

Macroeconomic Data

2007 GDP (Current Prices): 258.574 billion USD (IMF)

2007 GDP (Per Capita): 59,924 USD (IMF)

2008 GDP (Growth Forecast): 1.8% (IMF)

2008 Inflation (CPI): 3.2% (IMF)

2007 Unemployment: 5% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 12.811 billion USD (UNCTAD)

FDI (Outward): 22.101 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): N/A million USD (OECD)

ODA (Disbursed): 1,022 million USD (OECD)