Saturday 24 February 2018

Cowen: We are not looking for bailout

Fionnan Sheahan, Maeve Dineen and Sarah Collins

TAOISEACH Brian Cowen last night insisted the Government is not seeking a multi-billion euro bailout from the European Union.

He was forced to intervene in the face of intense speculation the EU was preparing a rescue package -- even though the cost of borrowing on international markets had eased for the first time in 12 days.

Amid suggestions that a ¿60bn EU package was being readied, officials in Brussels continued to insist that Dublin had "not requested" help.

However, the officials are working on contingency plans to keep the eurozone stable.

The Irish Independent has learned the existence of the rescue fund was discussed, among a number of other issues, by the Government with European Commissioner Olli Rehn during his visit to Dublin this week.

But the Government said it had no intention of accessing aid and would press ahead with December's Budget to prove it was in control of public finances.

The coalition is now considering publishing the four-year super Budget plan before the Donegal South-West by-election, with Monday, November 22, and Tuesday, November 23 mooted as possible publication dates. The Department of Finance also rejected reports from the Reuters news agency -- citing unnamed eurozone sources -- that Ireland was tapping a European rescue fund and was likely to get aid.

"Ireland is fully funded into the middle of 2011. There is no application for emergency funding from the European Union," the department said.

A spokesman for the European Commission also confirmed it had not received "requests from the Irish Government for any financial support".

However, the spokesman refused to be drawn on whether preparatory talks on a rescue were already under way.

Relief on the bond markets gave way to confusion as Mr Cowen was forced to deny reports Ireland had turned to the EU for emergency funding.

Traders said the market was swept by speculation that an ¿60bn debt relief package was being prepared to help Ireland borrow in 2011. They said it would be prudent for the Government to have an EU backstop in place before it went back to the market.

But speaking on the campaign trail in Donegal South-West, Mr Cowen insisted Ireland had made no application for funding and there were adequate funds in place to run the country until next July.

"I think it is important that people know that from a funding point of view for the State, we have adequate funding right up until July. There are other mechanisms available to us domestically and nationally after that as well," he added.

Irish government bonds gained for the first day in three weeks yesterday after a joint statement from Germany, France, Britain, Italy and Spain following the meeting of G20 countries in Seoul.

The interest rate charged to Ireland for borrowings fell from 9.26pc to 7.9pc. It was the first positive day on the markets for Ireland for two weeks.

The day began with leaders of the big eurozone economies who are attending the G20 summit in South Korea saying that "burden sharing" under a future EU mechanism would not be applied until after 2013.

They said only bonds issued after the mechanism is in place would be affected. The leaders made it clear funds are available to support Ireland if requested.

Germany, France, Italy, Spain and Britain issued a statement in the margins of a summit of G20 leaders to calm fears that pushed Irish borrowing costs to their highest levels since the euro was introduced 10 years ago. Mr Cowen welcomed the clarity brought from yesterday's statement by EU finance ministers. "It brought a greater degree of clarity to some of the issues that were causing concern in the markets.


"It received a positive reaction in markets today but obviously this is an issue that will be ongoing and we want to work with partners in the coming weeks and months to ensure that we have a stable currency for the euro as part of the wider financial system," he said.

The Taoiseach reiterated the Government's four-year programme of austerity measures was being finalised and would be revealed before the Budget.

Finance Minister Brian Lenihan also said it "makes no sense" to request aid as the government was fully funded to mid-2011.

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