Troika to raise property market policies and water debacle
EU-IMF team return to Dublin next week for second post-bailout inspection of year
The Central Bank on Dame Street, Dublin: The visit of the troika officials visit comes amid discord over Central Bank plans to dampen down the property market with new restrictions on mortgage lending.
Officials from the EU-IMF troika will raise property market policies and the water debacle with the Government next week when they return to Dublin for their second post-bailout inspection of the year.
The overhaul of the corporate tax regime will also be raised during the scheduled mission, as will the Government’s overall economic strategy and the budget plan for 2015.
Given the rapid advance in residential property values in Dublin particularly, the troika officials are likely to examine whether sufficient steps are being taken to increase the supply of housing in big urban areas of the State.
Their visit comes amid discord over Central Bank plans to dampen down the property market with new restrictions on mortgage lending. With mortgage debt crisis still unresolved, the visiting officials will take stock of ongoing efforts by the banks to deal with non-performing loans.
As part of this exercise they will scrutinise the development of arrears, banks’ engagement with defaulting borrowers and the flow of repossession cases.
The troika will be in Dublin as the Government reworks its contentious plan to charge households for water. This initiative was a key condition of the bailout programme so it falls to be examined by troika officials.
Long-delayed legislation to overhaul the legal professions and healthcare reforms, both of which were included in the bailout programme, will also be scrutinised. The development of “active” labour market policies to tackle long-term and youth unemployment will be also be addressed.
Officials from the troika – comprising the European Commission, the International Monetary Fund and the European Central Bank – carried out quarterly reviews in Dublin of Ireland’s bailout throughout the three-year rescue programme, which came to an end almost one year ago.
They will carry out two inspections each year until the State repays at least 75 per cent of the €67.5 billion emergency loan package, one more visit than would otherwise be the case under new EU rules to reinforce external oversight of economic policy in all member states. While most of the €22.5 billion in IMF loans will be paid off early, such visits would continue until 2031 under the current repayment plan.
The troika’s most recent visit to Dublin began in late April. Its officials are expected to spend most of the week in the city. While Ministers met the troika during bailout inspections, the main engagement next week will be at official level.
The troika’s supervisory powers are greatly diminished since Ireland left the bailout last December but it retains a wide-ranging mandate to examine the State’s capacity to repay the loans.
After big changes to Ireland’s corporate tax regime in last month’s budget, the troika is likely to examine whether any this presents any threat to the medium-term outlook for flows of foreign direct investment into the State.
As pressure builds on private and public sector wages after years of cuts, the officials are likely to examine the outlook for pay in the economy at large.
Give the lack of growth in the wider euro zone economy, the viability of the Government’s medium term economic plan and sustainability of the national debt will be assessed. Steps by the Central Bank to speed up the disposal of Government bonds it holds as a result of the deal last year to scrap the Anglo Irish Bank promissory note scheme will also be discussed.