Wednesday 17 January 2018

IMF does its first interim review of Irish bailout

Emmet Oliver and Maeve Dineen

The IMF is completing a report on the latest economic and banking developments in Ireland after its officials made a low-profile visit to Dublin last week for a review, the Irish Independent understands.

The officials carried out what is described as an "interim review'', the first such exercise since an €85bn package was agreed for Ireland in December.

It is understood that the report will deal with three key areas:

  • The progress by Ireland since December and whether certain "benchmarks'' are being achieved.
  • An update on the change of government and whether this could cause any "slippage'' in the programme.
  • The stress testing of the banks and their future capital needs.

The interim review is different from a full review of the programme which is discussed by the IMF's entire executive board. That kind of review can impact on whether funds keep flowing to a country.

It is understood that the group did not meet with Finance Minister Brian Lenihan but did meet with Department of Finance officials.

However, the group is believed to have spent most of their time in the Central Bank where it is overseeing technical discussions on the restructuring of the country's banks. The visit forms part of the consultation and co-ordination process that exists between Ireland and the IMF authorities as part of the bailout plan.

A statement from the Central Bank said it "provided an update on the progress of the implementation measures and there were discussions on financial conditions, PCAR/PLAR, recapitalisation and potential future 'solutions' for the banking sector".

It said the IMF, EC and ECB teams will be visiting the Central Bank regularly to oversee elements of the bailout programme.

Ireland has a range of "structural benchmarks'' to hit during the year. Passing the Budget and the Finance Bill was the first of these, but by the end of March stress testing of the banks must be concluded for AIB and Bank of Ireland.

By the end of June a new Budget Advisory Council needs to be set up and by the end of July a whole new system of spending controls also need to be agreed.

During these periods the Government must also send the IMF and EU monthly accounts showing what revenues are coming in and where spending is heading.

Irish Independent

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