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Troika returns today for the 10th progress review

Officials from the three agencies that oversee the bailout will kick off their 10th review of Ireland's progress under the rescue deal today.

The latest mission by the 'troika' of the European Central Bank (ECB), the International Monetary Fund (IMF), and the European Commission comes as falling borrowing costs and a shrinking budget deficit means the country is on course to exit the bailout at the end of this year.

But the visit comes at a time of increasing tensions within the troika. The IMF is concerned that worldwide austerity measures have failed to restore economic growth, while ECB officials remain broadly in favour of greater financial discipline.

The latest review will also coincide with increasing signs of "austerity fatigue" in Ireland, including last week's rejection of the Croke Park II deal by public-sector unions.

The Government's response to the Croke Park II vote will now join concerns about overspending in the health sector and the weakness of the banks at the heart of troika officials' discussions with ministers and officials here over the coming two weeks.

Critical

In their most recent review, those officials struck a more critical note than many here had become used to – including pushing for cost savings across the public sector, actions to help unemployed people back to work and voicing concerns over the mortgage crisis and the failure of banks to return to profit.

Since then, the Central Bank has set targets for the banks to tackle their mortgage books by offering to restructure the debts of customers in arrears.

But the rejection of Croke Park II last week is the biggest change since the ninth troika mission.

"After the rejection of the pay deal last week, intense discussions on the options now available for the Government may be the most fraught," Dermot O'Leary, an economist at Goodbody Stockbrokers, said in a note.

On the flip side, the improvement in the fiscal deficit means the Government can point to a real success in its discussions.

"With public finances better than targets in the first quarter, Ireland is likely to pass the latest review and thus receive the latest tranche of aid," said Mr O'Leary.

"Nevertheless, with some important issues remaining, the report card is not going to be totally unblemished."

Irish Independent