Irish Republic ‘to get bail-out’

The Irish Republic remains at the heart of the latest storm surrounding eurozone countries

A team of international officials is due to arrive in the Irish Republic for further talks on the debt crisis.

Representatives from the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Union (EU) will take part.

The talks will take place with the Irish Government, which has not itself asked for any aid.

Many believe some sort of bailout will be needed to prop up Ireland’s heavily indebted banks.

Fears about their stability has led to a rise in the price the Irish government – which has pumped billions into its banks – pays to borrow money.

Other eurozone countries that are also perceived as weak are seeing their borrowing costs rise too.

The latest discussions follow a meeting in Brussels on Wednesday of European finance ministers.

The ministers said they had not held detailed discussions on a potential bail-out for the Irish Republic – because the Irish government had not requested financial help.

Without a request for assistance, none can be given, despite the wishes of some fellow eurozone countries, such as Portugal and Spain, who would like the issue to be settled in order to stop disorder on the financial markets.

The Irish government has stressed it does not need to borrow money for public spending until into next year.

But it has a gaping budget deficit and will shortly announce another severe round of spending cuts and possible tax rises to plug the gap.

The country’s banks have recently become heavily dependent on loans from the ECB.

Belgian Finance Minister Didier Reynders was chairing the meeting of the Economic and Financial Affairs Council (Ecofin), on behalf of the Belgian presidency.

He said that there were differences between the Irish situation and the position Greece found itself in earlier this year, when it received an EU-IMF rescue package.

“This time we’re concerned about a country, but there’s no request from that country,” said Mr Reynders.

“It’s a major difference between this case and the Greece case because we have instruments [to act],” he added.

He also said that it was difficult for the European Central Bank (ECB) to go further in the provision of liquidity to Irish banks.

Once known as the “Celtic tiger” because of the strength of its economic boom, the Republic has since suffered the deepest recession of any country in the developed world, including collapsing property prices and a deeply-indebted banking sector.

EU economic and monetary affairs commissioner Olli Rehn said the Irish government was committed to the technical discussions taking place with the EU, the ECB and the International Monetary Fund (IMF).

These discussions focus on the plan to reduce the budget deficit over the next four years and to stabilise the banking sector.

“The Irish authorities are committed to intensify this work,” he said.

Mr Rehn also sought to clarify the situation regarding Greece’s bail-out, following concerns raised by Austria that Greece had not fulfilled its obligations under the EU-backed aid package, as well as reports that Austria had yet to submit its December contribution to the bail-out.

“A decision on the third instalment for Greece should be taken in December by the 14 participating euro area member states that participate in the loan scheme. But the disbursement has always been seen for January next year,” he said.

“The decision is in December, the disbursement in January, so there is no delay.”

There have been reports that the UK is considering offering billions of pounds of direct loans to the Irish Republic.

However, a spokesman for the UK Treasury said: “There has been no application from Ireland and we are not speculating on the situation.”

But Chancellor George Osborne said the UK was “ready to support Ireland”, as he arrived for the Ecofin meeting.

“We’re going to do what is in Britain’s national interest,” he said.

“Ireland is our closest neighbour and it’s in Britain’s national interest that the Irish economy is successful and we have a stable banking system.”

The Irish government has repeatedly denied that it is seeking outside support. Prime Minister Brian Cowen has said that he has not asked for bail-out money and that the Irish economy is well funded until next year.

An EU handout would be seen as a big loss of face for the Republic – essentially meaning that its survival and solvency was reliant on Brussels.

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