Friday 19 December 2014

EU to discuss plan next month for Irish exit from the bailout

Euro group chief Dijsselbloem hails promissory note deal at ecofin summit

Peter Flanagan Brussels

Published 12/02/2013 | 04:00

At the Eurogroup meeting in Brussels were, from left, Finance Minister Michael Noonan, Spanish Economy Minister Luis de Guindos, and Finnish Finance Minister Jutta Urpilainen

EUROZONE finance ministers will discuss next month how Ireland will exit its bailout programme, as the country again received high praise from Brussels.

Speaking last night, the head of the Eurogroup, Jeroen Dijsselbloem said ministers will "discuss in March how best to support Ireland in exiting the programme and returning to market financing".

Even though Ireland is on track to complete the terms of its three-year bailout programme at the end of this year, the troika of the EU, IMF and ECB are still expected to put a plan in place to support the country as it returns fully to the international markets.

Mr Dijsselbloem also praised the promissory note deal as "positive" for Ireland's path back to financial independence.

Solution

"We welcome the solution found for replacement of the promissory note and winding down of IBRC. These measures will lower the cost of the restructuring which will be positive for Ireland's return to the markets. We also welcome the troika's ninth report on the country which has earned substantial improvements in its market access," he said.

Mr Dijsselbloem's words were echoed by the EU's commissioner for economic affairs Olli Rehn, who pointed to the "growing confidence" in Ireland on the international markets, although he added that "important challenges" remain.

Having secured the deal on the promissory notes, the Government has turned its attention to getting concessions on the terms of its bailout of Allied Irish Banks and Bank of Ireland. The fund used to finance those bailouts has since been replaced by the European Stability Mechanism (ESM), which allows for direct recapitalisation of troubled banks.

The government wants the ESM to operate "retrospectively" which would allow the debts caused by the AIB and Bank of Ireland bailouts to be removed from the state balance sheet.

Mr Dijsselbloem said the exact terms of the ESM, and what exactly "retrospective" will mean, would be hashed out "in the coming months".

Meanwhile, the Eurogroup refused to rule out that uninsured depositors could be wiped out as part of a bailout for Cyprus.

Press reports indicated the long-awaited terms of assistance for the island could include a "bail-in" of some bank deposits there.

Despite repeated questioning, the Eurogroup head would not confirm bank deposits would be untouched as part of a deal.

Mr Rehn, however, said there had been "no proposal" from the European Commission that involved hitting depositors.

Even though the size of the bailout required by Cyprus is small in nominal terms, it is proving one of the most difficult packages to be agreed to.

The country first requested help last June, but none has been forthcoming as yet. By general consensus the country needs about €17.5bn – less than a quarter of the size of Ireland's bailout. That is almost equal to the size of the entire Cypriot economy, however, raising questions about the sustainability of any agreement.

The Eurogroup will have a "private sector team" assess the Cyprus' anti-money laundering measures before any bailout is agreed.

Irish Independent

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