Home repossessions will rise, warns EU ahead of troika visit
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.
It came as Finance Minister Michael Noonan met the IMF Christine Lagarde in Washington to discuss the possibility of getting a safety net loan after the country exits the bailout on December 15.
And staff from the IMF, the EU and the European Central Bank are arriving in Dublin tomorrow for the 12th and final 'Troika' inspection visit since the country entered the bailout in almost three years ago.
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. But it has a choice of whether it wants to seek a safety net loan of up to €10bn from the Troika after the bailout - or to 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 today in Washington followed by an evening meeting with IMF managing director Christine Lagarade at the Irish Embassy in Washington.
A spokesman for Mr Noonan said the agenda for both meeting was the same - the options available for exiting the bailout programme.
“Ultimately it is a matter for 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 loan facility from the Troika because it does not want restrictive conditions similar to the current 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. And it said the cost of liquidating the former Anglo Irish Bank could lead to also lead to Budget overruns. This is because the State will have to pay the shortfall if there is another write down 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 which built up during the economic crisis. It said that the property tax had “proved smoother” to implement than the €100 household charge.
The Troika report reveal that the Government still has not decided on the level of water charges households will pay when the first bills arrive in January 2015.
However, it said that the Government wants the new Irish Water company to be excluded from its balance sheet and not counted as part of the national debt. It said this would require “a credible plan to guarantee that the company covers 50pc of operating costs from water charges”.