Post-programme surveillance to focus on Irish banking sector

The Irish banking sector will be “very much at the core” of the EU’s post-programme surveillance of Ireland, EU commissioner Olli Rehn has said.

Speaking at the launch of a set of economic analyses by the European Commission in Brussels, the EU’s economics commissioner said that the post-programme reviews of Ireland’s economy will cover “all the essential areas “ of the EU and IMF’s economic assessments during the troika missions, focusing on fiscal policy and economic reforms, as well as the banking sector.

The banking sector will be “very much at the core of this post-programme surveillance because of the nature of the financial crisis and economic recession in Ireland,” Mr Rehn said.

In its analysis of Ireland, the European Commission highlights the “vulnerability” of the financial sector and the high percentage of non-performing loans, though noting that the country had made significant progress in terms of deficit reduction, financial supervision and labour market reform,during the bailout programme.

Preparations are underway for the first visit in what will be a bi-annual assessment of Ireland’s economic performance by the EU and the IMF following Ireland’s exit from the bailout in December.

Under the so-called “two pack” rules, countries exiting a bailout must be subject to post-programme surveillance until 75 per cent of its rescue loans are paid back. This is a separate procedure than the regular economic reviews that apply to all EU countries.

Ireland’s first review is scheduled for late april. Spain, whose banking bailout expired in December, will also be subject to post-programme surveillance, with the first review mission expected in May.