EU urges writeoffs of soured bank loans

By Eamon Quinn

The Government’s budget plans have avoided any major censure from the EU over policies ranging from the National Development Plan to the banks dealing with their troubled loan books.

However, in its assessment of Ireland’s budget framework, the commission urges the Government to further help distressed households and to encourage “write offs of non-recoverable exposures”.

Some debt advocates have criticised the Government as owners, and the Central Bank as regulator, for not doing enough to tell banks to write down mortgage debt, rather than selling off loans to vulture funds.

The commission also recommends the Government keep a tighter grip on spending and has again urged it “broaden the tax base”, a recommendation which Finance Minister Paschal Donohoe may find difficult to implement amid a review of the local property tax which could lead to the State capping the amount it collects from soaring house values.

The commission’s recommendation for the Government to use ‘windfall gains’ to cut Government debt levels more quickly should be easier to implement because the Government has long been committed to using further privatisation receipts from the sale of its bank shareholdings.

The commission also wants the Government to get more from the money it injects into the healthcare system.

The Organisation for Economic Co-operation and Development earlier this year said the Irish health system was “failing in terms of cost, patient satisfaction, and waiting times”.

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