IMF delivers tough assessment of Irish economy

Written By Unknown on Rabu, 03 April 2013 | 22.40

The IMF has delivered a tough assessment of Ireland's economic situation, highlighting lack of progress by banks and dangers of the country's debt becoming unsustainable if growth forecasts are missed.

The fund has criticised Irish banks for "inadequate progress" in dealing with non-performing loans.

In its latest review of Ireland's bailout programme the fund also raises concerns that banks are losing money even before putting cash aside to cover bad loans.

The IMF states lenders are "only beginning to tackle non-performing loans".

It says repossessions are low at 0.3% of total mortgage arrears in 2012, compared to 3.25% in Britain and the US.

The IMF said that suggested a need to strengthen the efficiency of the repossession regime.

It also says that the designation of specialist judges could concentrate expertise for handling a "potentially larger volume of repossession cases in an expedited manner", while maintaining protections for homeowners.

While acknowledging progress to date the fund expects Ireland's economy to grow by 1.1% this year, 2.2% next year and 2.7% in 2015.

However it says if growth was to fall short of these targets and to remain a sluggish 0.5% per year, public debt would escalate to one and half times the size of the economy by 2021.

That would put the economy on what the IMF calls an "unsustainable path".

The IMF also has called on the EU to deliver on pledges made to Ireland, including recapitalisation of Irish banks from European funds, to ensure a successful exit from the bailout programme.

It says allowing the EU's European Stability Mechanism bailout fund to directly invest in Irish banks could play "an invaluable role" in improving the country's prospects for recovery and making the public debt burden more sustainable.

The high unemployment rate is also a focus of IMF attention.

"If involuntary part time workers and workers only marginally attached to the labour force - two groups that registered significant increases - are also accounted for the unemployment and underemployment rate stands at a staggering 23%," the review says.


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