Ireland could need second bailout – top economist
Published 09/01/2012 | 18:46
CITIGROUP’S top economist Willem Buiter has recommended that Ireland ask for a second "standby bailout" as part of its negotiations with the EU/IMF/ECB troika which returns to Dublin tomorrow to conduct a review of our finances.
His comments come ahead of the troika’s fifth review of the €67.5bn loan programme this week.
While Ireland is priced out of bond markets currently to raise money, if it returned it would have to pay interest at 8pc compared with about 3pc from the troika.
"Borrowing at 8pc when you can borrow at 3pc doesn't sound like good business," he said.
He added that negotiations like this should happen over the long-term rather than “in a state of near panic at the last minute.”
So a second standby agreement should be in place in case it is too expensive for us to borrow on the open markets when we return later this year or early next year.
He also said that we should renegotiate the debt associated with the recapitalisation of IBRC, formerly Anglo Irish Bank with Greece and Portugal expected to seek a reduction from private investors on their exposure to sovereign debt.