Related News
Irish seen to get EU-IMF loan
By Shawn Pogatchnik |
November 19, 2010, Friday
|
Print Edition
Print Edition
THE governor of the Central Bank of Ireland said yesterday he expects his debt-crippled country to accept a loan worth tens of billions of euros soon from the European Union and International Monetary Fund.
Patrick Honohan made his frank assessment as forensic accountants and financial specialists from the EU and IMF landed in Dublin to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won't default on debts.
Those doubts have risen since September when Finance Minister Brian Lenihan raised the government's estimated cost of bailing out five Irish banks to at least 45 billion euros (US$62 billion).
That gargantuan bill has driven Ireland's 2010 deficit to 32 percent of gross domestic product, a post-war European record. Ireland is planning a four-year austerity plan, including a 2011 budget with 4.5 billion euros in cuts and 1.5 billion euros in new taxes, in response.
Honohan, speaking in Frankfurt where he was attending a meeting of the European Central Bank board, said he expected the EU-IMF loan - if approved by the Irish government - to provide a financial "buffer" for Irish banks that would not be used. He compared it to similar US moves in 2008 to inject banks with cash that reassured investors and was repaid.
"It's true that our banks need additional confidence. ... There have been substantial outflows of capital from Irish banks since April," Honohan told state broadcaster RTE.
As foreign investors have withdrawn or failed to renew deposits in Dublin banks, the ECB and Irish central bank have filled the gap with loans estimated to total 130 billion euros. The ECB's lending to Ireland has grown in recent months to represent nearly a quarter of the Frankfurt bank's total lending in the 16-nation eurozone. An EU-IMF cash injection would try to reverse the foreign outflow of capital.
Honohan said it was "desirable the (Irish) banks should have more capital available to show to the markets: Look, this is beyond question."
The governor said he expected Ireland and the EU-IMF delegation to agree terms and conditions on a loan worth "tens of billions" that "will be made available and drawn down as necessary."
Patrick Honohan made his frank assessment as forensic accountants and financial specialists from the EU and IMF landed in Dublin to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won't default on debts.
Those doubts have risen since September when Finance Minister Brian Lenihan raised the government's estimated cost of bailing out five Irish banks to at least 45 billion euros (US$62 billion).
That gargantuan bill has driven Ireland's 2010 deficit to 32 percent of gross domestic product, a post-war European record. Ireland is planning a four-year austerity plan, including a 2011 budget with 4.5 billion euros in cuts and 1.5 billion euros in new taxes, in response.
Honohan, speaking in Frankfurt where he was attending a meeting of the European Central Bank board, said he expected the EU-IMF loan - if approved by the Irish government - to provide a financial "buffer" for Irish banks that would not be used. He compared it to similar US moves in 2008 to inject banks with cash that reassured investors and was repaid.
"It's true that our banks need additional confidence. ... There have been substantial outflows of capital from Irish banks since April," Honohan told state broadcaster RTE.
As foreign investors have withdrawn or failed to renew deposits in Dublin banks, the ECB and Irish central bank have filled the gap with loans estimated to total 130 billion euros. The ECB's lending to Ireland has grown in recent months to represent nearly a quarter of the Frankfurt bank's total lending in the 16-nation eurozone. An EU-IMF cash injection would try to reverse the foreign outflow of capital.
Honohan said it was "desirable the (Irish) banks should have more capital available to show to the markets: Look, this is beyond question."
The governor said he expected Ireland and the EU-IMF delegation to agree terms and conditions on a loan worth "tens of billions" that "will be made available and drawn down as necessary."
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
