Giving Greece €250m sends a message to market -- Cowen
Published 27/03/2010 | 05:00
Taoiseach Brian Cowen yesterday stressed the importance to Ireland of helping Greece get out of it present economic difficulties to stabilise the euro, as eurozone leaders agreed to create a safety net for the debt-stricken country.
Mr Cowen said Ireland "will of course play our part in this collective effort" of all 16 eurozone countries backing the financial plan to help Greece.
The Taoiseach has pledged to loan anything up to €250m to Greece, if needed, as part of an EU financial bailout, despite the country's own budgetary difficulties.
The rescue package involves bilateral loans from each eurozone country and money from the International Monetary Fund (IMF).
The loans to the debt-ridden Greeks would be used only as a last resort, but might be paid over as soon as next month.
Mr Cowen said Greece has not asked for funding, but the arrangements put in place by EU leaders are expected to ease the pressure on Greece.
"The agreement balances the essential solidarity which exists among member states and which lies at the core of the union, with the requirement that Greece, as with any member state, must meet its obligations and deliver its commitments," he said.
Mr Cowen said stability in Greece, as part of the euro area, was "just as important for Ireland" as other countries in defending the currency.
"It is about sending a message to the market that we will defend it," he said. "You can't have stability at one point and instability at another point."
Under one scenario being mentioned, the EU would loan €15bn to Greece, with another €10bn coming from the IMF -- but these figures are not yet clear.
Based on Ireland making up 1.64pc of European Central Bank (ECB) capital, this would make Ireland's contribution €246m, if €15bn is the final figure.
At their summit in Brussels, EU leaders also agreed to look at further strengthening the stability of the eurozone, including the introduction of more punitive sanctions for breaking borrowing limits.
Watering down contentious demands from Germany and France for an EU "economic government", European leaders agreed to increase "economic governance", to prevent a repeat of the current debt crisis besetting the euro.
German Chancellor Angela Merkel wants to change the existing treaties governing the euro to toughen up the rules for euro membership.
Greece needs to raise €11.5bn on international markets by the end of April to refinance maturing debt and make interest and coupon payments, and another €10bn in May.
The euro was up 0.9pc against the dollar at $1.3400, recovering after trading as low as $1.3268, according to Reuters data. Interest rates on Greek government debt fell 0.2pc after the deal.