The troika gets critical

Ireland aims later this year to leave the rescue programme financed by the troika of lenders - European Commission, European Central Bank and the International Monetary Fund. Whether it can do so, and can operate without further financial assistance from international lenders is, however, not guaranteed. Much still depends -as a confidential draft report prepared by the European Commission and seen by the Irish Times indicates - on how two issues are handled in the meantime. First, how the State meets its remaining commitments under the economic adjustment programme. And second whether the Government continues to implement necessary economic reforms beyond 2013, after the programme has expired. The risk for any coalition government encountering mid-term political difficulties - exemplified by Labour's poor showing in the Meath by-election - is the temptation to slow the pace of reform, as reform fatigue takes an increasingly heavy toll on party support. To do so, as the troika in its latest quarterly review of Ireland's performance under the rescue programme implicitly advises, would be a mistake.

The latest troika report strikes a different, and more critical, note in assessing Ireland's performance. Yes, compliance with the terms of the programme has remained "strong overall" while progress towards achieving a balanced budget by 2015 is being maintained. But this time the troika is more concerned about some of the State's continuing failures than its more frequently heralded headline successes.

Specifically, it is concerned about "implementation risks", particularly in the health sector, where overspending has become a major problem, one that has yet to be addressed. Last year a €360 million overrun occurred on the health budget because, the report notes, the required savings "failed to materialise". To ensure this mistake cannot be repeated in 2013, the troika has attached a new condition to its lending programme, requiring the Government to report monthly on its efforts to curtail health spending. Minister for Health, James Reilly, who presided over last year's failure, has welcomed the move. But the troika's action amounts to a rebuke, and reflects a serious lack of confidence in his administrative ability.

But why does it take action from the troika to secure necesssary savings already identified: such as increasing the share of generic drug usage, and implementing many other health reforms already agreed? Without pressure from the troika on this and other issues that it has identified, how quickly would the Government have responded? The troika has counselled against any public complacency about the challenges ahead in exiting the bailout programme, and in living without the support of the international lenders. Its report deserves close scrutiny and merits wide public debate.