Tuesday 20 March 2018

Greece spoiling Irish efforts -- Bini Smaghi

Donal O'Donovan

Donal O'Donovan

IRISH hopes of avoiding a second bailout are being hurt by the latest crisis in Greece, former ECB executive board member Lorenzo Bini Smaghi claimed yesterday.

"Ireland has made huge progress over the last year. It is really a pity what is happening in Greece is spoiling all this," Mr Bini Smaghi said in an interview with Dublin-based Newstalk radio.

"Without the Greek events, I think Ireland would be able to come back to the markets."

The ECB is one of the troika managing the Irish bailout, alongside the European Commission and the IMF.

The price that markets would charge to lend to Ireland over 10 years remained above 7pc last night for a fourth day -- it's the highest rate since the beginning of February.

Ireland is not borrowing in the markets but government debt issued before the bailout still trades between investors -- making it possible to track the implied cost of borrowing for the country.

The 'yield', or interest rate, on the debt has fallen from almost 14pc in July 2011 to 6.7pc at the start of the month, a dramatic recovery that raised hopes of the country being able to tap the private sector for loans later this year.

This week, however, Irish yields rose above 7pc and remained at elevated levels last night -- a sign investors are increasingly wary of holding the bonds.

Mr Bini Smaghi said a No vote in the fiscal treaty referendum would damage Ireland's access to a future bailout. "It is very difficult to yield to Ireland if Ireland would vote No," Mr Bini Smaghi said.

Meanwhile, in Galway Irish economist Donal Donovan, a former IMF deputy director, told a conference that Greece should never have been accepted into the euro area, and said a Greek departure would not signal the end of the eurozone.

"While that may lead to some short-term panic, the risk of contagion to other states would be limited with strong intervention and support from the ECB," he told the annual conference of the Institute of Certified Public Accountants.

Irish Independent

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