IMF calls for personal debt law

The IMF has called on the Government to fast-track the new personal insolvency legislation in a bid to halt the rising problem of household indebtedness.

On completion of its sixth review of Ireland’s progress under its bailout programme, the IMF said that “financial sector reforms must lay the basis for banks to make sound loans in support of the recovery, including by improving their capacity to manage distressed assets.”

It said early preparation of the personal insolvency framework “is needed to address household debt distress, while protecting debt service discipline”.

“Bolstering growth and job creation is central to the success of the programme. Enhanced resources are needed for engaging activity with jobseekers, and care should be taken to avoid unemployment traps in the social payments structure.

“Re-investing a portion of state asset disposals will support job creation, but stronger competition enforcement is needed to harness the full growth benefits of these divestments,” the IMF added.

Broadly speaking, the fund’s latest summation of Ireland’s progress was positive — the agency saying that the Government’s policy implementation has “continued to be steadfast“, with “ownership of the programme” remaining strong, “despite the considerable challenges the country is facing”.

It also noted work done on promoting growth and job creation and admitted much of Ireland’s challenges are based outside of its control and dependent on eurozone stability.

“Approaching the halfway mark of its EU/IMF-supported programme, Ireland has once more met all programme targets. This attests to the Irish authorities’ steadfast policy implementation in the face of headwinds from renewed financial stress in the euro area, which has led to a significant rise in Ireland’s bond spreads.”

The IMF — which has, as scheduled, released another €1.4bn tranche in loans to Ireland — also spoke of the importance of the NTMA returning to the bond markets and of the Government completing the restructuring of Irish Life & Permanent.