Business Irish

Thursday 27 April 2017

IMF inspectors return to enforce bailout conditions

Thomas Molloy

Thomas Molloy

economy

IMF inspectors are back in Ireland to ensure that the Government continues to stick to the conditions attached to the €67.5bn bailout from the IMF and the European Commission.

The inspectors, who will finish their fifth report on the Government's progress by mid-February, will concentrate on the Government's reluctance to sell off many state-owned assets and look at ways of introducing the sort of deep financial sector reforms promised in previous agreements.

The inspectors, who will meet government ministers, the Central Bank, the National Treasury Management Agency and think-tanks such as the ESRI, will once again be led by Craig Beaumont, who is the IMF's mission chief for Ireland.

They arrive as the latest official figures suggest the economy contracted sharply in the third quarter and unofficial figures point to another contraction in the final quarter of the year. The IMF has already admitted that the Irish economy is "fragile" and said the Government should not cut further if last month's Budget fails to bring borrowing down by agreed targets.

Among the financial issues under discussion will be the Government's failure to sell Irish Life & Permanent and the failure to publish new rules to force banks to write off bad loans. The IMF wants new and transparent rules to stop banks hiding bad loans. The officials also want to see evidence that the Government has bolstered supervision of the bombed-out banking sector and want the Dail to belatedly pass legislation to give a legal footing to the Fiscal Advisory Council, which is meant to scrutinise the Government's financial projections.

Finance Minister Michael Noonan promised in a recent letter he was forced to write to IMF boss Christine Lagarde that he would hold discussions on re-organising the floundering credit union sector.

Environment Minister Phil Hogan, already in the public eye for bowing to IMF demands for a property tax, will have to reassure the fund's officials that he is making provision for a water tax and preparing to remove responsibility for water away from local councils to a new state-owned utility.

Benefit reforms

Social Welfare Minister Joan Burton will have to provide evidence that she is preparing a comprehensive programme of reforms to target benefits towards those who need them rather than the middle classes. The minister had to submit a progress report by the end of last week.

Mr Beaumont and his officials will also want to see evidence the Government is removing the various disincentives to work. Ireland's social welfare system has so many different benefits that it can make sense for some unemployed people to refuse jobs with good salaries. The failure of FAS and other organisations to train people properly will also be discussed.

Irish Independent

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