15/11/2010

Ireland 'Under Pressure To Accept Bailout'

The Dáil Government is today vehemently resisting intense pressure from Europe to accept a bailout package.

It has emerged that the European Central bank is suggesting that the Irish State accepts a bailout payment from Europe to stabilise its economy in order to avoid risking the recovery of other states such as Portugal and Spain.

Minister for Tourism, Culture and Sport Mary Hanafin flatly denied that the Government had engaged in discussions with the EU authorities on a possible bailout saying "there is no question of it" while Justice Minister Dermot Ahern called the speculation "fiction" despite conceding they will have to deal with events as they happen "day by day".

The rumours and uncertainty have been unnerving the international markets, which is pushing up the cost of Ireland's borrowing worsening Ireland's problems at every stroke. Ireland's leaders have been trying to quell the markets nervousness since last week, even going as far as eliciting the help from France, Germany, Italy, Spain and Britain at the Group of 20 summit ongoing in Seoul to issue a statement of confidence in the State.

However, despite the best efforts of European leaders and the Irish Government, it emerged this weekend Ireland may approach the European Financial Stability Facility (EFSF) for up to €80 billion. This has been denied by the Department of Finance.

EU finance ministers in Brussels will discuss Ireland's difficulties on Tuesday and it is believed high-level talks had already begun, involving European Commission President Jose Manuel Barroso and his economy commissioner Olli Rehn.

According to a report by Barclays Capital, the European Union and the International Monetary Fund would need to loan €80 billion to €85 billion to satisfy Ireland’s sovereign funding needs and to create an added buffer to help recapitalize its failed banks.

The EFSF will have the capacity to issue bonds guaranteed by euro area members for up to €440 billion for on-lending to euro area Member States in difficulty.

Despite improving Ireland's borrowing rates and shoring up its finances in the short term, accepting financial help could seriously damage Ireland's international economic reputation and lead to longterm financial penalties and heavy interest repayments that could hurt long-term growth.

(DW)

Related Irish News Stories
Click here for the latest headlines.

27 November 2012
ECJ Rejects Pringle Challenge To EU Bailout Fund
Dublin Labour MEP, Emer Costello, has welcomed this morning's European Court of Justice's decision to reject Thomas Pringle's challenge against the establishment of the permanent EU bailout fund, the European Stability Mechanism (ESM), and its finding that the ESM complies with EU law.
14 September 2011
€600m To Be Saved With Better Loan Terms
Ireland is to receive better terms for another set of loans to be given to the state through a European bailout scheme. The European Commission has adopted two proposals that will see Ireland receiving lower interest rates and extended maturities on loans.
03 December 2019
Future Of Ireland To Be Decided In Ireland, Not Westminster - SF
The future of Ireland will be decided on the island of Ireland, not at Westminster, Sinn Féin President Mary Lou McDonald has said.
13 March 2020
70 Confirmed Cases Of Covid-19 In Ireland
There have been 27 new confirmed cases of Covid-19 in Ireland, bringing the total number of cases to 70, according to the Health Protection Surveillance Centre (HPSC). 22 cases are associated with local transmission, two are associated with community transmission and three are associated with travel.
29 November 2019
Ireland Reaffirms Commitment To European Space Programmes
The Minister of State for Training, Skills, Innovation, Research and Development, John Halligan, has reaffirmed Ireland's commitment to European space programmes.