Ireland can manage amid EU rescue talks: IMF

BRUSSELS/DUBLIN - Ireland can manage on its own, the head of the International Monetary Fund said on Saturday, a day after euro zone sources told Reuters the former ‘Celtic Tiger’ was in talks about a possible EU rescue.

By (Reuters)

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Published: Sat 13 Nov 2010, 6:40 PM

Last updated: Mon 6 Apr 2015, 11:25 AM

IMF Managing Director Dominique Strauss-Kahn told reporters on the sidelines of an Asia=Pacific conference in Yokohama, Japan that Ireland had not asked the Fund for aid.

‘So far I have not had a request, and I think Ireland can manage well,’ he said.

Euro zone sources told Reuters on Friday that discussions on a possible aid package were under way, with one official saying it was ‘very likely’ Ireland would get financial assistance from the EU facility set up after Greece was forced to seek help in May.

Dublin has repeatedly denied that it plans to tap EU funds.

Strauss-Kahn said he too was unaware of talks about an EU bailout of Ireland and said the country’s difficulties had been principally caused by one big bank and were very different from those of Greece, whose economy faces deep-seated competitiveness problems.

Ireland’s borrowing costs shot to record highs this week on concerns about its deficit and worries private bond holders could be forced to take ‘haircuts’ on their holdings.

European Central Bank President Jean-Claude Trichet declined on Saturday to comment on the situation in Ireland, but said governments need to step up budget tightening.


Going to the EU for aid would be a humiliating setback for a country that posted the highest average growth rate in the 16-nation euro zone in the bloc’s first decade of existence.

The financial crisis, weak banking regulation and a property bubble fuelled by rock-bottom interest rates have combined to inflate its budget deficit to a projected 32 percent of gross domestic product (GDP) this year, by far the highest in Europe.

Ireland has blamed Germany for aggravating its woes by pushing the idea of asset value reductions or ‘haircuts’ for private bondholders in a future rescue mechanism from 2013. Sources told Reuters on Friday that the German government has now largely agreed on a plan that would include liability for private investors. It may discuss them with euro zone partners at a meeting in Brussels on Tuesday.

In Dublin, politicians and newspapers fretted over the loss of economic sovereignty an EU bailout could bring.

Eamon Gilmore, the leader of the centre-left opposition Labour party, said Ireland needed to redouble efforts to solve its crisis and avoid being ‘pushed around’.

In an editorial entitled ‘In the last chance saloon’, the Irish Times said all paths were painful, but the only real option was to fight on to avoid losing sovereignty.

The Irish Daily Mail criticised assurances from Prime Minister Brian Cowen that Ireland was fully funded until mid-2011 and so did not need a bailout.

‘There is an extremely large elephant in the room — and that is the question: how are things going to be different by next July?’ it asked.

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