Ireland to seek funds later than expected
Published 30/11/2011 | 05:00
IRELAND shouldn't need to return to the markets to raise money until the end of 2013, nearly a year later than originally forecast, an EU document has suggested.
The valuable breathing space should allow Ireland more time to get its budget deficit under control and avoid the worst of the fallout from any default by Greece.
Originally, Ireland was set to return to the bond market at the latest in early 2013, but it will now be possible to remain out of the markets until the second half of that year, an EU paper suggests.
However, the ESRI says in a report out today that it thinks Ireland should return to the market by the second half of 2012, or early 2013 at the latest, if it is to avoid a second bailout in 2014.
It warned that this requires an end to the crisis in the eurozone, as well as clear evidence of progress on the Irish public finances.
The NTMA even suggested in October that Ireland would have to test the markets as soon as late 2012, but this will no longer be necessary, according to a paper given to EU ministers yesterday.
The change comes because of the lower interest rate being charged for bailout loans and because EU/IMF officials think the cost of recapitalising Irish banks will be €16.5bn instead of the €35bn originally feared when the bailout was agreed.
Both estimates were already known, and bailout officials simply think they mean that the bailout money is going to stretch further.
Ireland is being presented as the model bailout country in Brussels.
"The Irish case is proving that the combination of solidarity and solidity can produce the expected successes," the President of the euro group Jean Claude Junkers said last night.
A memo circulated to ministers arriving in Brussels yesterday said the Irish bailout programme remains "well financed" and "implementation remains strong in all areas", the paper said.
The same document said that Ireland will not need to borrow in the money markets until the end of 2013, later than originally expected.
This eases the pressure on the Government in terms of getting back to funding itself in the markets, though Finance Minister Michael Noonan is understood to still favour trying to borrow some short-term loans in the money markets next year.
If markets stay as volatile as they are today that will be a real challenge regardless of how well Ireland is doing, so any let up in pressure is welcome.
A more controversial loan disbursal decision is whether to release an €8bn loan to Greece.
It is the final payment under the €110bn Greek bailout signed last year but the country is already set for an even bigger rescue.
Making sure Ireland secures its bailout funds for next year is the "bread and butter" issue for the Government at today's Ecofin meeting, Mr Noonan said last night.
European ministers are expected to formally agree to pay over €8.5bn in bailout loans to Ireland in January, at today's meeting in Brussels.
The loans were agreed under the bailout plan.
Ministers are expected to sign off on the loans after they are handed a report based on the last EU/IMF programme review.
The minister said the issue is the immediate focus for Ireland.
"We expect no difficulty in the decision, but it's the kind of bread and butter decision we need to make sure is in place to keep the country funded going forward," he said last night.