Commission completes eighth Programme review

The European Commission has completed its eighth review of the EU-IMF financial assistance programme for Ireland and has published the technical report by the Directorate General for Economic and Financial Affairs (ECFIN) which assesses programme implementation by the Irish authorities. The completion of the review enables a disbursement of EUR 0.8 billion from the European Financial Stability Fund / European Financial Stability Mechanism, bringing total disbursements from the EU, IMF and bilateral partners to EUR 56.6 billion. This represents 84% of the total international assistance of EUR 67.5 billion available under the programme. Through EFSF/EFSM, the EU contributes some 60% of this funding.

The report highlights the fact that Ireland’s programme implementation remains on track. All fiscal targets have been met and progress on financial sector reform continues apace. Key legislative changes – including new personal insolvency legislation – complement progress on deleveraging and operational restructuring which will bring banks closer to a return to profitability. Furthermore, important structural reforms – including on labour activation and water charging – are underway.

However, the report notes that the policy environment is still challenging. On the fiscal side, overruns in the health sector still pose a threat to the consolidation effort, while on the financial side persistent mortgage arrears represent a challenge for banks’ return to profitability. Structurally, the increasingly long term nature of unemployment needs to be addressed, along with efforts to open up certain sectors of the economy in order to increase competitiveness. The presence of such risks underscores the importance of continued strong programme implementation.