x Abu Dhabi, UAEFriday 28 July 2017

Irish central bank chief expects big EU/IMF loan

As international delegation of experts arrives in Dublin, central bank boss says visit likely to lead to 'tens of billions' of euros being used to prop up Ireland's economy.

DUBLIN // Ireland could receive “tens of billions” of euros as part of an EU/IMF bailout, the head of Ireland’s Central Bank said today as an international mission of experts arrived in the country.

Patrick Honohan said it was his “expectation” that a “very substantial loan, tens of billions” would be made to prop up Ireland’s crisis-hit economy.

Mr Honohan told the state broadcaster RTE Radio: “It’s not my call. It’s the government at the end. It’s my expectation that that is what is likely to happen.”

The mission from the European Union and the International Monetary Fund will examine Ireland’s financial situation amid fears it is set to become the second eurozone economy after Greece to be bailed out this year.

Mr Honohan said that while he expected the talks in Dublin to lead to a loan, he was not concerned about its effect on Ireland, where many fear a loss of sovereignty if a full bailout takes place.

“I think this is the way forward,” he said. “I don’t see it as something that is really worrisome or should lead to a huge change in direction.”

Despite huge international pressure, Ireland’s leaders have still not committed to accepting an aid package.

Prime Minister Brian Cowen’s government is concerned about how conditions attached to such a loan might affect domestic issues such as its policy on tax levels.

The Irish government is determined to safeguard its rate of corporation tax, which is one of the lowest in Europe.

The tax has allowed Ireland to attract business but has prompted accusations from countries such as Germany that it is an unfair advantage.

Ireland’s communications minister, Eamon Ryan, a Green party member of the ruling coalition, agreed with Mr Honohan’s analysis of the situation.

“I think Patrick Honohan put it very well. I wouldn’t disagree with what he said,” he told RTE.

“If needs be, if markets aren’t confident – and that has been our biggest problem – we would look at providing further capital.”

Mr Ryan said he expected the government would next week go ahead with publishing a four-year 15-billion-euro budgetary plan.

He did not expect that either the plan or a proposed front-loading of it with a six billion euro budget next month would be amended as a result of the EU/IMF mission. “I don’t believe it will,” he said.

The EU is extremely concerned that Ireland’s weakness could lead to a contagion which could drag down among other heavily indebted economies in the 16-nation eurozone such as Spain and Portugal.

Britain, which is not a eurozone member, said yesterday it was looking at “a number of different avenues” to help Ireland’s devastated banking sector.

The UK’s finance minister, George Osborne, said London was prepared to assist because the British and Irish economies were so closely intertwined.