Europe's Debt Crisis: Five Threats to the Common Currency

Ireland: Reforms Underway but Big Debts Remain

Ireland continues to battle the effects of the global downturn. Its budget deficit, standing at 12.5 percent of GDP, is almost as high as that of Greece. In 2009, the Irish economy was even worse hit than the German economy -- the European Commission estimated that the Republic's economy shrunk by 7.5 percent.

But leading economists, like Paul Krugman and Nouriel Roubini, have already struck Ireland from their list of countries in crisis. In early February, European Central Bank chief Jean-Claude Trichet labeled Ireland's example as "impressive."

The government in Dublin has already introduced the kinds of reforms that Greece, Portugal and Spain have only just begun addressing. It has slashed civil servant salaries and has embarked on a plan to cut spending by €4 billion. The government has also managed to stabilize Ireland's all-important banking sector, for now at least. Around €77 billion in bad loans have been taken off the books of the struggling banking sector.

But rating agency Standard & Poor's has correctly pointed out that this debt was only moved out of the official budgets -- meaning that it continues to provide a large element of uncertainty for the country.

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