Finance Minister Brian Lenihan said it "makes no sense" for the Government to request aid from the European Union as Ireland is fully funded to mid-2011 and is pushing forward with austerity measures.
“This country is not in a situation or position where it is required in any way” to apply for assistance, Lenihan said on RTE Radio today.
“It doesn’t seem to me to make any sense. It would send a signal to the markets that we are not in a position to manage our affairs ourselves.”
Irish government bonds gained for the first time in three weeks today after European finance ministers said plans for a new system to handle euro-region debt crises won’t apply to outstanding debt.
Ireland’s 10-year bond yield pared a two-day surge of more than 1 percentage point, and the difference, or spread, over German debt of similar maturity fell to 573 basis points from a record 651 basis points yesterday.
Lenihan said that while Ireland is “constantly in liaison” with the European Central Bank and European Commission, it hasn’t requested aid.
Irish bond yields climbed more than 2pc this month after German Chancellor Angela Merkel said on October 29 that bondholders should share part of the burden in future bailouts under the new system.
“Any new mechanism would only come into effect after mid- 2013 with no impact whatsoever on the current arrangements,” the ministers of Germany, France, Italy, Spain and the UK said in a statement distributed to reporters in Seoul today during the Group of 20 summit.
Central Bank Governor Patrick Honohan doesn’t believe that there are further “black holes” in the nation’s lenders, Lenihan said today. The Central Bank said September 30 that the bank rescue may cost as much as €50bn.
Lenihan said in October the Government will seek €15bn in savings and taxes during the next four years to reduce the country’s budget deficit to 3pc of gross domestic product from 32pc this year.
If the Government can’t obtain lawmakers’ approval for next year’s budget, to be announced December 7, it would be a “major failure” and hurt Ireland’s credibility, he said.