I met with the Managing Director of the European Stability Mechanism (ESM), Klaus Regling, on Tuesday, 8 May 2018. We had a positive and constructive discussion on a number of issues including the Irish economy and the future of the Economic and Monetary Union, with a focus on the future role of the ESM.
Mr. Regling noted that Ireland’s economic recovery since the crisis is ‘remarkable’. I updated him on recent developments which highlight the robust recovery and strong performance of the economy. I also outlined some of the more pressing challenges that need to be monitored and managed carefully. We discussed Brexit and its potential impact on the Irish economy, the ongoing necessity for investment in infrastructure such as housing and transport, and the legacy issue of non-performing loans which continues to impact the banking sector.
In relation to Europe, we agreed on the need to continue to strengthen the economic and monetary union, and reviewed the possible development of the ESM in that context.
The creation of the ESM was one of the key euro area reforms after the crisis and it has proven itself to be a very effective and efficient institution. Four of the five countries that received loans from the ESM, or its predecessor, the European Financial Stability Facility, have now successfully ended their programmes, and have among the highest growth rates in the euro area. As part of the EU-IMF Programme of Financial Assistance, Ireland was also a beneficiary of the European Financial Stability Facility. Officials from the ESM therefore continue to visit Ireland on a twice-yearly basis, participating in Post-Programme surveillance reviews for the purpose of its Early Warning System. The ninth review is taking place this week.
Discussions on the future role and remit of the ESM include a review of the ESM lending toolkit and whether the ESM should play a greater role in programme design and monitoring in the future. The potential development of the role of the ESM of course requires careful consideration and deliberation and work is ongoing, at both technical and political level, in advance of the June European Council at which EU Heads of State of Government will reflect further on deepening the economic and monetary union.