THE International Monetary Fund has delivered a brutal assessment of Ireland’s economic situation, complaining of a lack of progress by banks, and dangers of the country’s debt becoming unsustainable if growth forecasts are missed.
The IMF has criticised Irish banks for ‘inadequate progress’ in dealing with non-performing loans, stating that they are ‘only beginning to tackle non-performing loans’.
It complains repossessions are low at 0.3 per cent of total mortgage arrears in 2012, compared to the 3.25 per cent in the UK and the US.
Calling for a more efficient repossession regime, the IMF proposes the designation of specialist judges to concentrate expertise in handling a ‘potentially larger volume of repossession cases in an expedited manner’, while maintaining protections for homeowners.
While acknowledging progress to date, the IMF expects Ireland’s economy to grow by 1.1 per cent this year, by 2.2 per cent next year and by 2.7 per cent in 2015.
However, it warns that if growth was to fall short of these targets and to remain a sluggish 0.5 per cent per year, public debt would escalate to one-and-a-half times the size of the economy by 2021 and put the economy on an ‘unsustainable path’.
The IMF says allowing the 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.
On the high unemployment, the IMF warns: ‘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 per cent.’
