Troika wants swift action on banks and legal profession
Problems in banking, health and welfare sectors must be tackled, say inspectors
The troika is mounting a final push on the Government to settle entrenched problems in the banking, health, legal and welfare sectors before the bailout ends in mid-December.
The international lenders want speedy action to improve mortgage payment discipline, increase drug budget savings, bolster efforts to tackle unemployment and implement a long-delayed overhaul of the legal profession.
Amid questions over the validity of key assumptions in the budget a fortnight ago, they will also carry out a detailed analysis of the likely savings from the measures set out in the fiscal plan for 2014.
Central to this work will be an examination of the projected savings from a series of measures announced in last year’s budget which do not come fully into force until next year.
A team of inspectors from the European Commission, the European Central Bank and the International Monetary Fund arrived in Dublin yesterday for their 12th and final mission before the rescue programme concludes on December 15th.
At the outset of their 10-day visit, they are concerned about “unfinished” but difficult reforms in a number of key sectors. This is in spite of repeated assurances from the Government that it has met all targets set for it in the bailout agreement.
Although attention has shifted since the summer to talks between Dublin and the lenders on an emergency credit line to guard against any turmoil in the wake of the bailout, the inspectors’ prime focus is on policy questions which are within the Government’s purview.
With results expected by late November from an ongoing bank stress test, the inspectors place great emphasis on this scrutiny of the banks’ balance sheets. “This is very, very significant and important work,” said a troika source.
A priority on this front for the inspectors is the effort to tackle the mortgage arrears crisis.
While recognising the need for more settlements with mortgage borrowers who have no realistic prospect of paying off their debt, the inspectors believe the banks should do more to ensure payment discipline from borrowers who can but will not repay loans. “We’re looking to the banks to come forward with the solutions,” the troika source said.
With the 2014 health budget still the subject of debate within the Coalition, the inspectors plan an in-depth examination of the savings forecast for the health sector from the Haddington Road and Croke Park pay agreements.
The disputed probity audit of the medical card scheme, from which major savings are projected, is also likely to feature.
The inspectors also believe a new round of major savings from the drug budget can be realised. “There are further substantial savings to be made by cutting the State’s pharmaceutical bill. This is long-hanging,” said the troika source
The inspectors are also unhappy with prolonged delays in a reform plan for the legal sector, which is supposed to cut legal costs. “It’s not enough only to publish the legislation, it needs to be implemented,” the source said.
Legislation unveiled in 2011 met resistance from the professional bodies for barristers and solicitors. The committee stage Dáil debate on the Legal Services Regulation Bill was delayed by more than a year until July, when Government amendments to the least contentious sections of the Bill were published.
The debate is not due to resume until next month and a further round of amendments is awaited.