Troika is leaving ‘unfinished business’

The troika is leaving Ireland with business unfinished, including changes to the medical and legal service, but they will be pursued through the new EU governance to which all eurozone countries are now subject.

EU sources were full of praise for the way the Government and the public implemented most of the changes, returning the country to growth, and ensuring the banks were now safe and sound.

The country is extremely well positioned to benefit from an upturn in the global economy, more resilient and able to deal with shocks than the country could have expected to be at this stage when the programme began.

The source said no reasonable person should expect all the problems to be fixed in a three-year programme.

“This was a huge boom and bust”, the source said. “There is unfinished business and areas where we would like to see more ambition.”

The memorandum of understanding signed by the Government and the Troika defined action to be taken which did not include privatisation and only committed the State to submitting a legal services bill to the Dáil. It could not be pushed further than that, as it was up to the Dáil to take the next steps, but it was disappointing not to see it enacted, the source admitted.

Members of the Oireachtas and the public could take over to put pressure on the Government to make other changes they believe necessary in areas such as the sheltered professions, GP reform (as costs were still so high for patients) and the legal service bill, the source said.

They praised the action taken to repair the banks and deal with outstanding debts, including mortgages. While it would have been better to have more progress, the banks did not have the ability to deal with the vast quantity of endangered loans.

He also defended the limited nature of the asset quality test of the Irish banks carried out recently by the Central Bank of Ireland, saying they were based on significantly strengthened rules compared with the situation before the crisis.

He believed, when the ECB stress tests are carried out next year, the banks will be in a better position again as all elements in the banks were rapidly improving. “Ireland did not get away with anything in the programme,” he added.

One of the surprising positive developments was that the banks were back into the market with unsecured junior debt and securing money with Irish mortgages at favourable rates. The State too had begun to fund itself from the markets earlier than expected and at favourable rates, he added.

Setting specific time scales for selling off State assets created problems in terms of timing and ensuring the best price was received. “We are indifferent to ownership. What matters is the performance and sometimes the best way is to privatise, but we never suggested that privatisation is a cash source,” he said.

While there was no single measure that could be pointed to as underpinning the success of the programme, there was enormous ownership with all measures coming from the Government and being approved by the State. “There was no democratic deficit there”.

The Government made the decisions taking into account the social impact of fiscal measures and the Troika was only there to check if the measures added up.

The extremely high quality of Ireland’s public administration was also a major factor, with everyone, from the most junior person in ministries to the most senior, well trained, knowledgeable of their portfolio and having an understanding of the big picture, contributing to “very rich discussions”.


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