Troika to focus on mortgage crisis
The EU-IMF-ECB troika’s quarterly visit will see the usual review of the bailout programme, meetings with ministers, the opposition and senior civil servants overseeing spending.
The €3.5bn in savings agreed in last month’s budget and an exit plan for Ireland from the bailout at the end of this year will form the centre of talks.
But a thrust of the troika’s demands in the coming months will centre not only on fixing the rescued lenders here, but what the Government is also doing about the thousands of debt-ridden mortgage owners and the loans they are struggling to pay.
“We’re two years into the programme now. It’s all about the next steps now, helping Ireland emerge from the programme end of the year, it’s forward looking,” said a Government source familiar with the talks.
The troika mission will officially arrive tomorrow and examine actions covered under programme for the last quarter of 2012 and expected tasks in the first few months of 2013.
Requirements such as setting up the property tax, welfare-related cuts, and hikes in motor costs were completed as well as a reduction in the pensions bill.
Other tasks the Government were required to carry out included examining limits in health spending and organising finances of the local government sector. Disposal of bank assets and stricter rules for banks were also on the agenda.
The Government has been given a “clean bill of health” on its required actions, according to sources.
Many of the issues also run into this year, including an assessment of banks and how they will work out their non-performing mortgage portfolios.
One of the key actions expected this year is required legislation to close off a legal loophole in what is known as the Dunne judgment. This judgment has prevented lenders from taking repossession of homes in recent years. While it has been viewed as a protection for mortgage owners, some have viewed it as a way of delaying the inevitable when it came to unsustainable mortgages.
The agreement between the troika and the Government for this quarter says that authorities are required to “remove unintended constraints on banks to realise the value of loan collateral under certain circumstances”.
Troika officials are expected to note Bank of Ireland’s €1bn in assets sales earlier this month
Efforts to fix the credit union sector will also look at the legislation passed last year, which saw €250m pumped into a fund for institutions.
Preparations for stress-testing of banks across Europe at the end of this year, including in Ireland, will also be discussed
Troika officials are also set to zoom in on the unemployment crisis. Questions will be asked about “activisation” of those out of work. “What’s keeping people out of work and what’s pushing them to take up opportunities,” was how one department source put it last week.
Striking figures demonstrate that this must and will be a big focus for the Government this year. Of the huge numbers that are out of work, the number who have been on the live register for two years or more is over 125,000.
Social Protection Minister Joan Burton will this year push for further funds to get people back to work, under such projects as Pathways to Work. Up to €1bn will be spent this year by her department on activation programmes and employment supports.
The troika want a review carried out in the coming months on such labour activation policies. A successful outcome could lessen the pressure on her department to reduce welfare amounts.
The issue of outsourcing the training of the unemployed will also have to worked on in the coming weeks.
We can expect the 10-day review by the troika to be a visit that the Government will very much play up as the speeding up of an exit strategy for Ireland.
However, with support needed from the ECB and the IMF on re-entering the bond markets, as well as the drawn out saga regarding promissory notes, not to mention the billions blown on the bank bailout, ministers will be seeking lot of information themselves when they sit down across the table from our European paymasters.
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