So I met the Troika yesterday. And it was a very interesting meeting. From their point of view the Government’s programme, which is predicated on economic growth, may need tweaking to reflect changing economic conditions. In short, they’re not sure Plan A is working and they are open to a plan B.
I was delighted to hear they were aware of the difficulties that the current approach to fiscal consolidation is causing. They felt that the growth projections for the country are broadly right but this year’s growth would be lower than expected. In response, I’ve called on the government to finally come up with policies that put citizens ahead of bankers’ balance sheets and conclusively address the household debt problem.
Troika representatives were conscious that cost of living in Ireland was too high, stressed the need for internal devaluation, and stated that the implementation of solutions to the mortgage crisis has been too slow in coming.
They also said there were opportunities for substantial reductions in public sector spending that wouldn’t result in service provision cuts. In particular they referenced a threefold increase in health spending during the boom years, without a corresponding increase in service provision.
We also discussed the issues of bondholder payment. it was pointed out that it was the previous government and not the Troika that insisted on payments to unseen unguaranteed bondholders of the pillar banks.