Govt opens books to IMF and Euro experts
Financial chiefs will today lock horns with the International Monetary Fund (IMF) and European officials on bail-out options to save the banks and drag the country from economic meltdown.
The Government will open its debt-ridden books to an influential team of experts while the harrowing spectre of a potential multi-billion rescue looms over Dublin.
Despite the daunting arrival of IMF specialists yesterday, the Government - reluctant to accept the need for outside assistance – maintained that it has not asked for or been granted financial aid.
Taoiseach Brian Cowen said talk of a bail-out was belittling Ireland.
The detailed talks will centre on two fronts – plans for €15bn savings over four years and next month’s €6bn slash-and-burn budget as well as the shuddering damage done by the banking black hole.
It has been estimated that the banks need €50bn to survive but the losses are compounded every month by worsening bankruptcies, mortgage arrears, a run on deposits and loan defaults.
In some quarters the bail-out numbers being speculated are as high as €90bn.
It is understood an IMF team laid the groundwork yesterday in the offices of the Central Bank for a trawl of Irish state banking records.
Britain has already stepped up to the plate with Chancellor George Osborne stating that Treasury chiefs were considering all options for financial aid to Ireland.
The Dublin talks follow two days of discussions in Brussels involving eurozone and EU finance ministers and heated debate across Europe over a way forward for Ireland.
Those sitting down include IMF experts, the European Central Bank and European Commission officials.
Putting the Irish case will be Department of Finance officials, financial regulator Matthew Elderfield and the Central Bank.
Government sources suggested the talks would last several days.
Insiders in Brussels believe most EU Governments expect Ireland to take advantage of a bail-out – but more than likely not before the Government unveils a four-year economic recovery programme, due next week.
There are also concerns of so-called contagion across Europe with troubled states like Portugal, Italy and Spain facing their own economic woes which experts fear could deepen if borrowing costs are not reined in.
Mr Osborne refused to speculate on whether the UK was on the brink of announcing bilateral loans to Ireland, or making a contribution to an EU bail-out package.
He was speaking after talks in Brussels with his EU counterparts, at which Finance Minister Brian Lenihan, repeated Dublin’s rejection – so far - of a bail-out offer from the member states.
Mr Osborne said support was in Britain’s national interest but warned the talks were precautionary.
European Commissioner for Economics Olli Rehn described the negotiations as “an intensification of preparations of a potential programme in case it is requested and in case it is necessary”.
It is believed most EU governments are still urging Dublin to opt for a bail-out to reinforce the euro’s battered credibility.
Mr Osborne pointed out that, apart from its four-year recovery plan next week, Dublin would be unveiling a new budget next month in a bid to deal with its massive deficit.
Only then, say EU officials, is Dublin likely to feel comfortable taking bail-out loans from Brussels – if it decides to cave in to pressure and do so at all.
