Revised IMF deal targets cost cuts

LAWYERS are facing an assault on their fees while the medical and pharmacy sectors will also be targeted for cost reductions under the EU/IMF bailout.

But the lowest-paid in society will see their incomes increase after the Government got the green light to reverse the €1 cut in the minimum wage.

The troika of European Commission, the European Central Bank and IMF confirmed that Ireland was meeting its targets under the programme.

But the troika warned that difficulties lay ahead and the Government would have to continue implementing the programme.

“The programme is on track but challenges remain and steadfast policy implementation will be key,” said the commission’s director of economic affairs, Istvan Szekely. He was speaking at a press conference in Dublin to announce the results of the first quarterly review of the programme.

Staff teams from the three organisations spent the last 10 days in the country conducting the review and examining changes sought by the Government.

At a separate press conference, Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin confirmed some of the agreed revisions to the programme.

The troika and Government have agreed that:

* The minimum wage, cut by the last government as part of the bailout, can be restored to €8.65 hour in return for other measures to lower costs for employers.

* The Government can proceed next month with its “jobs initiative” — a package of measures aimed at creating jobs.

* There will be a major spending review to seek further ways of reducing costs in the public service.

* There will be no further loan transfers to NAMA, with the banks instead retaining these loans and working them through.

The troika said the economy would grow more slowly than previously expected this year, but the medium term outlook was better.

It said the bank restructuring plan was “a major step towards restoring the Irish banking system to health”.

The troika also welcomed the fact the Government had “taken full ownership” of the programme.

But it made clear it expected the Government to continue abiding by it, with a range of deadlines looming in the coming months.

These include removing restrictions on competition in “sheltered sectors”, including the legal, medical and pharmacy professions.

Mr Szekely said lower costs and independent regulators were required in such sectors to “make the consumer the king”.

But the troika said the “absolute priority” for Government is job creation. “This crisis will not be over until we see jobs coming back,” said Ajai Chopra of the IMF.