THE EU has warned that an increase in home repossessions is on the cards in its second-last inspection report before the end of the €85bn bailout.
The warning came as Finance Minister Michael Noonan met IMF managing director Christine Lagarde in Washington to discuss the possibility of getting a safety-net loan after the country exits the bailout on December 15.
In its just-published report on its most recent inspection visit, the European Commission warned that a rise in home repossessions is on the way as the banks finally tackle the issue of mortgage arrears.
"While safeguards have been put in place to keep co-operating borrowers in their homes, given the number of non-cooperating borrowers, particularly in investment properties, an increase in the number of repossessions from the very low levels experienced in recent years is likely," it said.
The Government is required to still heed the directions of the troika until the final bailout loan is paid over.
However, it has a choice of whether it wants to seek a safety-net loan of up to €10bn after the bailout, or rely on the cushion of a €25bn cash pile it has borrowed in advance for next year.
As part of his discussions, Mr Noonan had a 45-minute meeting with IMF deputy managing director David Lipton early yesterday in Washington, followed by an evening meeting with Ms Lagarade at the Irish embassy.
A spokesman for Mr Noonan said the agenda for both meeting was the same – the options available for exiting the bailout.
"Ultimately, it is a matter for the Irish Government to evaluate and decide on the post-programme options," he said.
The Government is understood to be leaning in the direction of managing without a safety-net loan because it does not want restrictive conditions similar to the bailout deal.
In its inspection report for its last visit in July, the European Commission mentioned the difficulties in achieving this year's target of €300m savings from the Haddington Road public sector agreement.
It added that the cost of liquidating the former Anglo Irish Bank could also lead to budget overruns, because the State will have to pay the shortfall if there is another writedown on the value of Anglo's remaining toxic property loans as they are transferred to NAMA.
However, it said that Ireland was making "good progress" in dealing with the public and private debt that built up during the economic crisis. It said the property tax had "proved smoother" to implement than the €100 household charge.
The troika report revealed that the Government still has not decided on the level of water charges that households will pay when the first bills arrive in January 2015.
However, it said the Government wants the new Irish Water company to be excluded from its balance sheet and not counted as part of the national debt.