Ireland has been convinced by the European Union and the International Monetary Fund to seek a bailout after its government failed to overcome its growing debt mountain alone.The de-fanged “Celtic Tiger,” once the envy of other European countr
Ireland has been convinced by the European Union and the International Monetary Fund to seek a bailout after its government failed to overcome its growing debt mountain alone.
The de-fanged “Celtic Tiger,” once the envy of other European countries for its rapid economic growth, is the second euro member to require a rescue package since the financial crisis began.
Greece received a bailout of €110 billion in May after its government debt reached crisis point, sparking talk of the break-up of the euro.
Ireland’s bailout won’t be as big: Finance Minister Brian Lenihan said the loan would be less than €100 billion but wouldn’t give more specific details.
Economic and Monetary Affairs Commissioner Olli Rehn told Reuters the European Commission, European Central Bank and IMF would prepare a three-year package of loans by the end of the month.
“Providing assistance to Ireland is warranted to safeguard the financial stability in Europe,” he told Reuters.
“The program under preparation will address both the fiscal challenges of the Irish economy and the potential future capital needs of the banking sector in a decisive manner.”
Britain, which is not a part of the euro, has pledged about £7 billion in aid.
Ireland’s government debt blew out after it bailed out some of the country’s biggest banks, which became insolvent when the property bubble burst.
Despite a series of budget cuts the Irish government was unable to gain the confidence of bond markets, which continued to price its debt higher.
