Irish 'bound to' reject bailout deal -- Soros
Published 15/12/2010 | 05:00
THE new Irish Government "is bound to repudiate" the rescue package agreed with the EU and IMF, international financier George Soros says.
Writing in today's "Financial Times," Mr Soros says markets recognise that the deal will not hold, which is why the Irish rescue brought no relief on bond yields.
He also says the high interest rates charged on rescue packages make it impossible for the weaker euro countries to improve their competitiveness vis-à-vis the stronger ones.
Mr Soros became famous for making huge profits in 1992 after betting on sterling being forced out of the European currency system.
Since then, he has become one of the strongest critics of the dangers inherent in the globalised financial system.
This week, Fine Gael spokesperson on communications and energy Leo Varadkar said his party would try to renegotiate the IMF agreement if it formed the next government, and would seek to have the interest rate lowered.
After some internal debate, Fine Gael is to vote against the package in today's Dail debate.
Earlier this month, Mr Varadkar criticised Labour's proposal to re-negotiate the €6bn Budget correction for next year. "The only way we can get money to fund the country next year is from the IMF: we are not going to get money from the markets, so the €6bn is a condition of that.
"I can see why it is politically advantageous to say we could have €4.5bn in cuts, but that is not true and I think once the election is out of the way, Labour will admit that," he said.
In his article, Mr Soros recommends putting rescue funds into the banks, at lower rates, rather than lending them to governments. Some re-negotiation of government debt may be needed, he says.