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Friday 19 September 2014

Terms of back-up may be too harsh to accept

Colm Kelpie and Fionnan Sheahan

Published 25/10/2013 | 02:00

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A NUMBER of European leaders are flagging "unacceptable" conditions if Ireland wants an overdraft facility in place as we exit the bailout in December, Finance Minister Michael Noonan said yesterday.

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The comments signal Ireland may yet opt to go it alone after we leave the bailout to avoid stringent conditions linked to having a loan on standby.

Mr Noonan (pictured) and Taoiseach Enda Kenny are currently lobbying to get concessions ahead of the bailout exit. The Government is weighing up whether to have a back-up loan, known as a precautionary credit line, to reassure the international markets providing us with funding.

Mr Kenny is briefing EU leaders on Ireland's position and seeking support, while Mr Noonan heads to Washington next week to meet the IMF.

Mr Noonan told the Irish Brokers Association annual lunch that "some of our partners in Europe are talking about conditions that would be unacceptable to us".

He later told the Irish Independent that he's debating the issue and no conditions have been imposed.

The Government is looking at whether it should apply for a so-called precautionary credit line from Europe or the IMF to help ease the transition from bailout to accessing the markets on a full-time basis.

Mr Noonan is taking part in a series of separate meetings in Strasbourg and Frankfurt involving key figures from the troika to discuss the options available when we leave the EU/IMF programme on December 15. He will also meet IMF chief Christine Lagarde in Washington next week.

Attending an EU summit in Brussels, Mr Kenny did not rule out taking on the loan facility.

"The question is how to do that in the most sustainable and durable fashion is what we have to consider," he said.

Mr Kenny said the promise to address Ireland's legacy bank debt still stands and has been repeated on a number of occasions.

"That is a fundamental principle adopted by the European Council on a number of occasions now. I want to see that followed through because that presents another option for Ireland and indeed for other countries. So it is a case of the European Council following through on the decisions that it makes," he said.

TEASING

Mr Noonan told the Irish Independent that he had been "teasing out" the thoughts of European Commission Vice President Olli Rehn and European Central Bank head Mario Draghi.

"We have options and it's a finely balanced decision for the Government and we could go either way, and we have the option of going either way," the minister said.

"I want to make sure before I advise the Government that from the highest level available I have sussed out all the implications of one rather than the other. That's what the issue is."

But he later clarified to this newspaper that no conditions have yet been imposed or laid down by the troika.

"All precautionary programmes or precautionary credit lines come with conditions attached," he said.

"What I was trying to explain to people was that while the obvious thing was to have a precautionary credit line to make our position more secure, it will depend on the conditions that are attached.

"There are normally conditions attached to a precautionary programme and there's a supervisory content as well," he said.

But he wouldn't say what conditions might be unacceptable to Ireland.

Irish Independent

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