Troika returns to Dublin for post-bailout scrutiny

Inspectors from the EU/IMF troika have arrived back in Dublin to scrutinise the Government’s execution of the budget and its delivery of bailout reforms.

The inspectors were in Merrion Street last night for scheduled talks with Minister for Finance Michael Noonan, their first since Ireland left the rescue programme last December. The visit continues until the end of the week.

Health spending overruns were a major area of concern during the rescue programme so the inspectors are expected to closely examine a forecast shortfall in health saving this year of up to €228 million.

They are also expected to look at the most recent economic forecast from the Department of Finance, which said a further €2 billion retrenchment would be required next year to bring the budget deficit within limits set down in EU law.

Further retrenchment
With both Labour and Fine Gael under strain in elections next month, Ministers would still prefer to keep any further retrenchment to a minimum.

The mission is the first of two post-bailout surveillance reviews this year by the troika.

Such visits will be undertaken twice yearly until 75 per cent of the €67.5 billion in bailout loans are repaid, so they will continue for many years. During the three-year bailout, there were four inspections a year.

Strict oversight measures
Post-bailout surveillance is a long-standing feature of IMF programmes. Surveillance at European level comes alongside a swathe of new strict oversight measures which were introduced at the height of the turmoil in the euro zone to ensure fiscal discipline in member states.

“I can confirm that this is a routine post-programme surveillance visit which involves all three institutions – Commission, ECB and IMF. The focus will be on legacy conditions from the programme,” said a spokesman for the European Commission.

However, EU economics commissioner Olli Rehn is on record saying the situation in the domestic banking sector will be "at the core of this post-programme surveillance because of the nature of the financial crisis and economic recession in Ireland".

In its most recent public report on Ireland last month, the Commission drew attention to the “vulnerability” of the financial sector and the high percentage of non-performing loans.