Friday 28 July 2017

Government and Troika fail to agree on plan for IL&P

Laura Noonan and Fionnan Sheahan

THE Government has failed to agree a restructuring and recapitalisation plan for Irish Life & Permanent with the IMF-EU bailout team.

The coalition will get a pat on the head from the IMF-EU team today for reaching a number of key targets for the first year of the bailout.

The Troika are also expected to play down speculation about a supplementary budget being needed to meet the deficit reduction targets for this year.

Sources last night confirmed the Government and Troika had failed to agree a restructuring and recapitalisation plan for Irish Life & Permanent -- even though it was supposed to be hammered out by the end of last year.

The bancassurer has about €1bn less capital than the demand imposed on it by 2011's stress tests after it failed to sell its life insurance arm.

The Troika was expected to announce today how long the Government had to come up with that cash.

But sources last night said no final decision had been taken and discussions would continue over the coming weeks.

The long-term future of Permanent TSB also remains unclear. The bank and life insurance companies are set to be formally separated by April.

The latest three-monthly review of the bailout will also serve as a look back on the country's first full year operating under the direction of the IMF, European Commission and ECB.

The IMF-EU will approve of the Government meeting the key targets on the reduction of the deficit to just under 10pc of GDP; adjustments to the public finances; the restructuring of the banks and the introduction of legislation.

However, doubts remain over whether the Government will hit the 8.6pc of GDP deficit target this year amid the ongoing eurozone crisis.

The Department of Finance last night rejected Sinn Fein finance spokesman Pearse Doherty's claim the Government would not meet its targets.

The department said suggestions of a supplementary budget "do not reflect the reality".

"In spite of economic developments, the budgetary position at end-2011 was better than anticipated at Budget time on December 6. This better- than-expected position further underpins the achievement of the deficit target for this year," the department said.

"There is no suggestion of a supplementary Budget this year. We are implementing this year's Budget and we have no intention of undermining economic confidence for no reason."

Nonetheless, technical discussions are also ongoing between officials looking at changes to the programme because of the worse global conditions than when the bailout was originally drafted.

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