Troika returns to Dublin for review of economy

Representatives of the troika returned to Dublin yesterday for a week-long review of the Irish economy, amid concerns about the new Government’s commitment to EU deficit and debt targets.

Officials from the European Commission, the European Central Bank and the ESM fund are taking part in the fifth “post-programme surveillance mission” to Ireland which will conclude on Friday.

The twice-yearly mission was agreed when Ireland became the first euro zone state to exit an IMF-EU bailout in December 2013. Under the terms of Ireland’s €67 billion bailout, the State will be subject to two post-programme visits per year by the troika until 75 per cent of the bailout loans are repaid, a process that could take decades.

While the review had been pencilled in originally for May, it was deferred due to the protracted negotiations on the formation of the new Government.

Pillar banks

It is understood that officials from the EU institutions will meet representatives of the NTMA, the Central Bank, the two main pillar banks and the Minister of Finance

Michael Noonan

, as well as representatives from the private sector.

The IMF, which is not taking part in the mission, is due to visit Dublin in the coming months under the so-called Article 4 process, a surveillance mission that all IMF members sign up to on joining the fund.

A European Commission official said that the aim of the visit was to “inquire about current budgetary and economic developments” and to “learn in more detail about the plans of the new Government”.

The suspension of water charges and proposed changes to USC are also expected to be raised during the discussions.

Fresh exchequer data

Following the formation of the new administration last month, the Government will publish an updated “summer economic statement” later this month, which will incorporate fresh exchequer data. It is expected that officials and the Minister for Finance will update the troika on their revised medium-term economic plan.

While all EU countries are obliged to submit their national budgets to Brussels by October 15th, Ireland will for the first time engage in a “national economic dialogue” ahead of October’s budget, with the aim of including the Opposition in the budgetary process.

In its latest analysis of the Irish economy, the European Commission warned the Government that it must broaden its tax base to reduce the State’s vulnerability to economic shocks, given its high exposure to external economic volatility.

Despite Ireland’s status as the fastest-growing economy in Europe, concerns have been raised about the exchequer’s dependence on corporate tax receipts.