Brussels says talk on new rescue is 'unhelpful'

Commission confirms refinancing the Government's €30bn bailout of Anglo not dealt with in the current review

Finance Minister Michael Noonan presenting the budget for 2012 in December

Laura Noonan in Brussels

SPECULATION about a second Irish bailout is "unhelpful" given that Ireland is progressing well under its current programme and enjoying economic growth, a spokesman for the European Commission said yesterday.

The comments came as a commission official confirmed that the issue of refinancing the Government's €30bn bailout of Anglo Irish Bank would not be dealt with on the latest review mission into the bailout, which began yesterday.

Earlier in the week, Citi's chief economist William Buiter told a Dublin press conference that Ireland was heading for a second bailout unless it managed to renegotiate the terms of that Anglo bailout.

"It is not particularly helpful at this time to fuel speculation about a second programme when the first one is delivering, is being implemented, and we can see the results," the spokesman for Economic and Financial Affairs Commissioner Olli Rehn said yesterday.

The spokesman added that the Irish economy had returned to growth, the banking progress had been "assessed positively" by the ECB/EU/IMF troika, and structural reforms were being implemented.

"What is important and essential in the case of Ireland is to ensure the continuation of the good job done," he stressed.

It is understood that the commission has not ruled out Ireland returning to the markets as planned in 2013.

Market funds

If market funds cannot be secured, Ireland could be able to continue to borrow cash from an enhanced European bailout fund without actually being in a bailout programme.

Restructuring the terms of Anglo's bailout, which involved a €30bn IOU to the bank carrying interest of more than €17bn, would mark a major step in establishing the sustainability of Ireland's debt.

An EU official yesterday confirmed that technical talks on ways to re-engineer the debt were ongoing, but said that agreement was not expected at this month's review mission.

The mission will largely focus on budgetary measures and will also include some discussion of labour market reforms, the public sector wage bill and the sale of state assets.

On the banking front, the future of Irish Life & Permanent will be discussed in the aftermath of the suspension of the sale of Irish Life, while progress on Irish banks' asset sales will also be in focus.

The Central Bank in Dublin has already said it would be open to Irish banks easing off on asset sales if a deterioration in European markets meant those sales would have to be carried out at a higher than expected loss. The European authorities are understood to share these views.