17/11/2010

Bail-Out Looms As EC Comes To Dublin

It has emerged that the Finance Minister Brian Lenihan has agreed to emergency EU bank funding as a number of EU officials make their way to Ireland.

Despite stopping short of accepting a full bailout, Mr Lenihan has admitted for the first time the State's banks may need billions more of capital to stay afloat.

Top European officials are heading to Dublin, possibly today, to make a technical assessment of Ireland's current banking position after which the Government is expected to make a formal request for EU funding.

Speaking on RTÉ's Morning Ireland, Mr Lenihan said the Government would engage in a "short and focused" consultation with the European Commission, the European Central Bank and the International Monetary Fund, which will take place in Dublin tomorrow.

According to the Financial Times this morning, and despite denials by the Irish Government, the team of EU officials making their way for an inspection are the same team charged with assessing Greece before its bailout earlier this year.

George Osborne, the UK chancellor, has suggested Britain would make a donation to help out the State along with the EU support, saying: "Britain stands ready to support Ireland in the steps it needs to bring about… stability."

Meanwhile, Taoiseach Brian Cowen has continued his attempts to quell the exponential growth in concern over the economy, telling the Dáil last night that, "we need to be careful about what we say so that we don’t add to the turbulence".

"Those that are now commenting on Ireland’s financial situation should also remember that the Exchequer is fully funded into the first half of 2011, so the impending sense of crisis that some wish to suggest the Irish State faces is not a fair reflection of the facts."

However, the Taoiseach admitted that while "substantial progress has been made" in tackling the deficit, the Government was acutely aware "further measures" would be required to restore sustainability to the public finances.

"Our revenues and our spending are out of line to the tune of €19 billion and this is a gap that is presently being filled by borrowing. This cannot continue. We must continue along the road of budgetary consolidation which we first embarked upon in 2008," Mr Cowen said.

(DW/GK)

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