One of the first euro area countries to have been hit by a large financial crisis, Ireland is now emerging from its difficulties and gradually regaining access to market financing. Activity is slowly recovering, the unemployment rate has started a gradual decline, cost-competitiveness has improved, and strong exports have helped to eliminate the external deficit. Recapitalisation of the banking system, determined and sustained fiscal policy action and growth-enhancing reforms along with strong political and social buy-in have helped to restore market confidence and reduce sovereign borrowing costs. The debt-to-GDP ratio, which has been rising sharply, is now approaching a turning point and, at somewhat above 120%, the budget strategy rightly aims at putting it on a sustained downward path.