Lenihan: Euro bail out deal is in interests of all
Finance Minister Brian Lenihan claimed today that a massive €500bn guarantee to bail out the euro was in the interests of European citizens.
Mr Lenihan said the currency rescue package showed EU states were determined to shoulder the economic and financial burdens of member states facing exceptional circumstances outside their control.
“Member states are showing their resolve to support the overall European economy and the interests of all European citizens,” the minister said.
The deal, sealed in Brussels in the early hours after marathon talks, includes €60bn from the European Commission and guarantees on €440bn from states in the eurozone in a new European Stabilisation Fund if and when required to prop up flagging economies such as Spain and Portugal.
There is also an option for up to a further €250bn from the International Monetary Fund (IMF).
The aim of the guarantee is to stabilise the euro, avoid speculation on the value of the currency and support countries trying to service national debt.
Mr Lenihan said it was purely a contingency plan and a credible way for the EU to support countries facing economic problems.
The minister also insisted there were no suggestions during meetings that Ireland was facing the kind of difficulties that would require an EU bail out.
“In the past two years, the Irish Government has stabilised the public finances with fiscal consolidations of almost 5% of GDP in 2009 and a further 2.5% of GDP in 2010,” Mr Lenihan said.
“As evidenced by last week’s Exchequer returns, these fiscal adjustments have helped to place Ireland on target to meet our commitments under the Stability and Growth Pact.”
Ministers were also briefed on the European Central Bank’s plans to intervene in the international money markets by buying government and private bonds to target and deter speculators from making money on the back of national debts. It is hoped the move will stop the weakening of the eurozone.
“Finally, I, like my colleagues, recognise the very significant announcement by the European Central Bank that will help ensure the stability of the euro area,” Mr Lenihan added.
Richard Bruton, Fine Gael finance spokesman, said the guarantee will put investors off gambling on whether weaker European states can finance their debts.
“The package put together by the EU finance ministers and the European Central Bank demonstrates determination and will certainly succeed in scaring the financial wolf-pack which has been circling around the weaker members of the eurozone,” Mr Bruton said.
“However, the deeper question is whether the strategy being designed is sufficient to remedy the problems that gave rise to the panic that swept the markets.
“At its source was the belief that Greece would need to restructure its debt and could not resolve its problems through retrenchment alone.”
