Ireland has a good chance of being able to borrow in the international markets again if European leaders take measures to stop the euro one debt crisis spreading, according to the International Monetary Fund.

IMF deputy director Ajai Chopra said Irelanad was meeting its targets under the programme. He recommended that European leaders promptly implement further measures to stem the debt crisis across the 17-country euro area.

In their third quarterly review of Ireland’s bailout, the so-called “troika” of the IMF, the European Commission and the European Central Bank said that Ireland was “on track” and “well financed”.

It was “very important” to take the contagion risks across the euro zone out of the equation when considering Ireland’s performance, he said, and that “the country needs to be judged by its own merits.”

Ireland’s borrowing costs would be lower and there would be “good prospects” of returning to the bonds markets if it weren’t for wider euro zone crisis, he said.

“The problems that Ireland faces are not just an Irish problem,” said Mr Chopra. “They're a shared European problem. What we need and what's lacking so far is a European solution to a European problem.

“What's critical now is for Europe to dispel the uncertainty that's being created by the lack of what's perceived by markets as an insufficient response.”

Earlier, the Minister for Finance Michael Noonan said that Ireland was funded up until 2013 but had “a very heavy repayment date” in January 2014 when the country had to repay up to €12 billion in debt.

Mr Chopra said that the decision of international ratings agency Moody’s to downgrade Ireland’s credit rating on Tuesday to ‘junk’ status was “directly linked” to a change in euro area policy. This has raised the prospect of forcing private investors to share the cost of future bailouts of countries, he said. “The downgrade is largely a reflection of events outside of Ireland,” he said.

Querying the track record of ratings agencies during the crisis, he said: “Rating agencies have got it wrong on the upside during boom times by under-estimating risks and it’s entirely possible that they are also getting it wrong on the downside by overestimating the risks.”

European Commission director Istvan Szekely said Ireland has met all targets and that the next report card on the Government’s performance would be in mid-October.

European Central Bank official Klaus Masuch said that the Frankfurt-based bank was still opposed to the Government’s plan to force losses on senior unsecured and unguaranteed bondholders in Anglo Irish Bank and Irish Nationwide Building Society. He warned that such a move was “very risky” and would undermine confidence in the Irish banking sector.

Mr Noonan told reporters earlier that there was “unfinished business” on so-called burden-sharing with these senior bondholders and that the Government would re-visit this issue with the troika in the autumn.

Mr Masuch said that the ECB was supporting the Irish banks with loans of about €150 billion and that the Irish banking sector had profited from the ECB’s liquidity measures more than any other country’s banking sector.

“I know that there is sometimes criticism of ECB policy decision here in Ireland. One has to understand that being in the euro area means that monetary policy can't be divided, can't be set differently for one country than the other,” he said.

Mr Chopra said that the country was experienced a “very wrenching” adjustment from the boom years and that it was important that the poor and most vulnerable in Irish society were protected. The troika was in Ireland to “cushion this wrenching adjustment”, he said.

At a press conference in Dublin this afternoon, Mr Noonan said the review showed Ireland was making good progress.

“We have met the fiscal targets. We have met the banking targets. We have met the structural reform targets,” Mr Noonan said, adding that Ireland had shown that it “can and will meet demanding fiscal targets”.

He said the EU-IMF programme provided a "clear path of sustainability".

"At a political level, the willingness to meet the targets is underpinned by the new Government which has such a large parliamentary majority," he said.

He said there were also positive developments in that the economy was returning to growth after three years of decline. "Competitiveness is improving pretty dramatically. Ireland ranks high in terms of desirable places to do business." Productivity had also grown strongly, he said.

Minister for Public Expenditure and Reform Brendan Howlin said the new Government had inherited a very damaged economy and had set out a clear path to restore it. “It is helpful and useful to us to have that progress analysed in such a forensic way by the troika and I think that by any objective analysis, the commitment we made to map out and deliver a path to recovery has been delivered upon.”

He said Ireland was meeting all its commitments and would be 1.5 per cent below its targeted expenditure profile by the end of June.

He said there was a future for the country and a future that is worth investing in "not only by the people of Ireland in the difficult decisions they have had to accept, but also for external investors to be confident that we are going to have a future here".

Fianna Fáil lader Micheál Martin said the troika's positive assessment of Ireland's progress shows the previous government’s policies were working.

“The main finding of the assessment is that all key elements of the programme agreed last year remain unchanged and that the December 2010 budget has shown that Ireland is putting its budgetary house in order,” he said. “The assessment shows that there has been no significant change or new policy in the last four months. The positive indicators on the budget come as a result of measures which both Fine Gael and Labour voted against.”