Date Released: 04 April 2013
The latest report from the International Monetary Fund (IMF), in its ninth review of Ireland, confirms the huge challenges that remain for the economy and the prospect of an exit this year from the bailout programme according to SIPTU economist, Marie Sherlock.
“There has been a lot of talk both here and abroad over recent months about the stabilisation in the economy and about tentative signs of recovery. Progress has been made but we are still far removed from any significant recovery in terms of employment and in domestic demand,” Marie Sherlock said.
“The IMF review is a timely reminder that the Irish economy remains in a very fragile position and that unless we comprehensively tackle the public and private debt overhang we are facing a lost decade of growth. At the end of December 2012, some 143,851, or 18% of all mortgages, were in arrears of 30 days or more, or the mortgages were temporarily restructured. For many of these households the call by the IMF for speedier and more efficient repossession procedures is truly alarming. Eviction need not be an option. A comprehensive humane solution must now be found for these households to take them out of their financial limbo.
“Furthermore, half of all property related debt is held by SMEs and workers have had to bear the brunt of the financial problems of these massively leveraged firms through pay cuts and job losses. In many cases, the property investments by the SMEs were unrelated to their core business activity. In this regard, the IMF has called for a mechanism to disentangle property investment from the core activities of the business.
“The IMF has also repeated its call on EU leaders to stand by their June 2012 commitments to separate bank and sovereign debt and says such a deal is ‘a critical component of a comprehensive strategy for Ireland’s durable exit’ from the bailout programme. In our view this is essential for any recovery.
“Crucially, it calls for a review of the fiscal consolidation plan for 2014 and 2015 in the preparation of the budget later this year. We believe that the promissory note deal has afforded the Government the opportunity of using the savings involved for the creation of jobs and of minimising cuts to public services and social welfare while meeting the 3% deficit target by 2015. The urgency for job creation is underlined by the IMF finding that a ‘staggering’ 23% of the workforce is unemployed or underemployed,” she added.