Business Irish

Tuesday 17 October 2017

EU/IMF/ECB warns government on health budget if it is to make bailout targets

Lyndsey Telford

IRELAND’S debt masters have warned the Government must rein in its runaway health budget if it is to continue reaching its bailout targets.

As the latest review of Ireland's bailout began, the European-International Monetary Fund (IMF) Troika singled out under-fire Health Minister Dr James Reilly and demanded he strengthen financial management of his department.



"The mission starting today will focus on ensuring that Ireland's remaining fiscal adjustment is durable, growth-friendly and in line with programme targets in a way that burden-sharing is fair and that the most vulnerable are protected," said a European Commission source.



"It will focus on strengthening budgetary management in the health sector to ensure that it can deliver desired objectives within budget."



The latest review from the Troika - the IMF, European Commission and European Central Bank - is the eighth of its kind since Ireland struck a bailout deal in 2010.



The outcome is expected to be detailed by Finance Minister Michael Noonan and Brendan Howlin, Minister for Public Expenditure and Reform, next Thursday or Friday.



The ministers met officials from the Troika in Dublin on day one.



Ireland was deemed to be on track in its bailout progress following the Troika's last review.



But with the latest European Union summit to take place in Brussels later this week in advance of Ireland taking over the European Commission presidency in January, disputes have broken out over a debt deal.



Labour MEP Emer Costello warned hopes of a bank debt deal with Europe may not be struck during the country's term as European Council president.



At a briefing at the EC headquarters in Brussels, Ms Costello said Ireland must be seen to act in a neutral manner when taking the presidency.



"Certainly as the holders of the presidency and chairing the various different meetings in a neutral capacity it does make it more difficult because the tradition is that the country of the presidency would not act in a self-interested way," she said.



Ireland's bailout chiefs injected €1bn into the economy following its last review in July.



That, on top of €0.7bn from bilateral European Union donors, brought total European funding to Ireland to around €36.6bn from this time two years ago.



But serious concerns remain, with the Health Service Executive expected to have overrun its budget by €500m by the end of the year.



Dr Reilly was accused of having botched the 2011 budget for health given the massive deficit the department faces.



Officials noted at the time that was despite challenging economic circumstances.



Last month, European Commissioner Oli Rehn said he was more concerned with Ireland reaching its debt targets and not the time it takes to do so.



He said the quality of the end result was more important than the schedule and that finding the right solutions for Ireland and the whole euro area was the commission's focus.



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