IMF negotiators say talks going well despite thorny issues
Published 24/11/2010 | 05:00
TALKS with Irish officials on a bailout for the country were going "quite well'' and moving towards an agreement, International Monetary Fund (IMF) officials signalled yesterday.
A package of €85bn is likely to be agreed within days, although it is understood talks are currently concentrating on banking issues, including what happens to bondholders in the banks and how the banks can be downsized.
The scale of capital to be injected into the banks is also being discussed, with officials poring over the bank's mortgage and SME loan books.
There were also reports that economist Dr Colm McCarthy met the IMF delegation, but it is understood there was no "formal'' meeting with Mr McCarthy.
Of the €85bn of funding, it is likely that €50bn will be lent for Exchequer requirements, with €35bn earmarked for the banks. Based on a €35bn figure, the amount of capital for individual banks would be significant, although AIB is likely to take a large portion of this.
The IMF is expected, like it did in Iceland and Greece, to review Ireland's progress on a quarterly basis. The review comes as part of conditions for getting a loan from the Washington-based organisation. The IMF staff check that reforms any government has promised are actually introduced and spending kept at levels as agreed with the IMF.
The organisation sets various 'benchmarks' that must be met, otherwise loans, which are paid in tranches, can be delayed.
Speaking yesterday in New York, IMF deputy managing director John Lipsky said talks were moving forward quickly, but it was up to the Government to make political decisions.
"Obviously, our work there is technical, not political. But ultimately decisions have to be made by governments, not by technicians," Mr Lipsky said.
"The negotiations are proceeding quite well, quite rapidly. They're very intense. Obviously there is a great focus on progressing this as rapidly as possible.''
Mr Lipsky added he wouldn't like to speculate about the impact of political problems on the prospects of a rescue.