This would help “concentrate expertise and provide resources for handling a potentially larger volume of repossession cases in an expedited manner”.
IMF mission chief for Ireland Craig Beaumont welcomed the Government’s move to change the legal loophole that made it difficult for banks to secure home repossessions. The threat of home repossessions was necessary to deter strategic defaulters, although it should be only used as a “last resort”, he said.
Ireland remains on track to exit the EU/IMF bailout programme at the end of this year. However, there are many challenges that could derail the economy.
The IMF criticised the banks for taking so long to tackle the mortgage arrears crisis. It warned that if the economy only grew by 0.5% over the next few years, then debt would reach 134% of GDP by 2018. Moreover, if banks need extra capital following the next round of stress tests, this would put unsustainable pressure on the State.
The Washington-based institution wants the European Stability Mechanism (ESM) to directly recapitalise the banking system. This would be the most effective way of breaking the feedback loop between the banks and the sovereign.
However, this position puts it at odds with the eurozone creditor member states. Germany, Finland, and the Netherlands remain opposed to injecting ESM funds into the banks, particularly for legacy assets.
The Government wants to use the estimated €1bn in savings through the restructuring of the promissory notes to relieve the austerity policies needed to meet the 3% deficit target by 2015.
Mr Beaumont said reaching this target remained the priority but the IMF would take a “fresh look” at the Government’s request later this year when there is more visibility on the growth and fiscal figures for the year.
Unemployment will remain at double digit levels for the next number of years. The IMF urged the Government to double the staff numbers at Intreo offices to deal with the long-term unemployed.
The IMF released its ninth review of the economy on the same day that the latest exchequer figures were released. The tax take for the first three months was marginally ahead of target at €8.82bn. Expenditure came in at €10.9bn for the year, which was 5.9% below the same time last year.