THE EUROPEAN Commission yesterday raised the possibility that Ireland could implement a faster and deeper budget adjustment programme.

In its most detailed assessment yet of Ireland’s adherence to the terms of November’s EU-IMF bailout, the commission said “it is essential that Ireland meets and, if possible, exceeds the agreed fiscal consolidation objectives”.

The commission is one member of the troika of international organisation’s overseeing Ireland’s bailout. The European Central Bank and the International Monetary Fund are the others.

Following a budget adjustment this year of €6 billion, a further €3.6 billion is scheduled for 2012.

On Tuesday, Minister of State for European Affairs Lucinda Creighton said a larger adjustment could be contemplated next year. The commission’s report, which covers the period up to the end of March, found most of the conditions of the bailout had been met. This will allow a second tranch of bailout funds, worth €3 billion, to be released.

The report reiterates the commission’s view that Ireland’s debt position is sustainable. According to the report, developments since the end of last year have made the position marginally more sustainable.

The commission believes public debt will peak at a slightly lower level than previously anticipated.

On the risks to the economy in the medium term, it believes these are “balanced” between a worse-than-expected and a better-than-expected outcome. It notes levels of emigration have been lower than anticipated. While this will result in a bigger social welfare bill, the larger pool of workers will increase growth potential.

The report restates a schedule for structural reforms, including the implementation of the McCarthy report on privatising State-owned assets, the rationalisation of the water industry and the conducting of an independent report into the energy market. On liberalisation of the professional services sectors, which include legal and medical services, it notes “prices are particularly high”.

While the commission accepted the decision not to transfer a further €20 billion of bank assets to Nama, it said other de-leveraging options will have to be found to ensure 2013 targets are met.