Anglo Irish bailout ‘a shock to the system’
The governor of the Irish Central Bank, Patrick Honohan, today described the bailout of Anglo Irish Bank as “costly, but manageable” and “a shock to the system”.
Mr Honohan was speaking at a conference in Hong Kong.
It has been estimated that the total bill for the Anglo bailout could cost the Government up to €25bn.
Mr Honohan told the conference that Ireland’s deficit this year would be to approximately 20% of GDP, or €30bn.
The cost of the Anglo bailout will be included in the national accounts this year, pushing up the deficit estimate, combined with the €3bn being spent on Irish Nationwide, and the less than €1bn sum for EBS Building Society.
The Central Bank governor said the deficit will grow because Ireland has been transparent in noting its loan losses, and that the country will have a stable future.
“It’s a very high deficit measured this year because we’re taking the hit, we’re acknowledging the losses in the banking system and those losses which are being paid for by the government have to be included in the deficit,” he said.
The European Commission last week gave the Government permission to pump as much as €24.5bn into Anglo, more than the €22bn that Finance Minister Brian Lenihan previously said the lender may need.
Mr Honohan said that Ireland is committed to its target of reducing its budget deficit to 3% of gross domestic product by 2014.
The National Treasury Management Agency (NTMA) will tomorrow auction Irish bonds in a bid to raise funds for the State.
