Ireland agrees emergency aid with finance ministers
EU finance ministers say Ireland will receive money from financial stability instruments and bilateral loans
EU finance ministers on Sunday evening welcomed a request from the Irish government to apply for a financial assistance package.
A statement issued after conference calls by the finance ministers from the 16 members of the eurozone and then the 27 EU member states, said that they had agreed that providing assistance to Ireland was “warranted to safeguard financial stability” in the EU and in the eurozone.
The statement said that Ireland would receive money from the European financial stabilisation mechanism (EFSM), worth €60 billion, and the European financial stability facility (EFSF), which has €440bn at its disposal. This could be supplemented by bilateral loans from member states, the statement said, adding that the UK and Sweden had indicated they could offer loans to Ireland.
Finance ministers said that support to Ireland would be provided “under a strong policy programme” to be negotiated with the Irish authorities by the European Commission and the International Monetary Fund in liaison with the European Central Bank.
The statement said that the programme would address the “fiscal challenges of the Irish economy in a decisive manner” and would build on the fiscal adjustment and structural reforms the Irish government is expected to present next week as part of its four-year budget plan.
The plan will set out how the government plans to reduce its deficit by €6bn in 2011 as part of a strategy to cut the deficit to 3% of gross domestic product by 2014. Ministers said that given the “strong fundamentals of the Irish economy, decisive implementation of the programme should allow a return to a robust and sustainable growth, safeguarding the economic and social cohesion”.
The statement said that a programme to be agreed with the Irish government would also include a fund for the potential future capital needs of the banking sector. Ministers said that measures including deleveraging and restructuring of the banking sector would “contribute to ensuring that the banking system performs its role in the functioning of the economy”.
After the programme has been approved by the Irish Government, it will be the endorsed by finance ministers from the eurozone and the EU’s member states on the basis of an assessment by the European Commission and the European Central Bank.
Fact File
The statement by the Eurogroup and Ecofin ministers in full
“Ministers welcome the request of the Irish government for financial assistance from the European Union and euro-area member states. Ministers concur with the Commission and the ECB that providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the euro area.
In the context of a joint EU-IMF programme, the financial assistance package to the Irish state should be financed from the European financial stabilisation mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU member states. The United Kingdom and Sweden have already indicated today that they stand ready to consider a bilateral loan.
EU and euro-area financial support will be provided under a strong policy programme which will be negotiated with the Irish authorities by the Commission and the IMF, in liaison with the ECB.
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The programme will address the fiscal challenges of the Irish economy in a decisive manner. It will build on the fiscal adjustment and structural reforms that will be put forward by the Irish authorities in their Four Year Budgetary Strategy next week. This strategy will provide the details of the government’s commitment to achieve fiscal consolidation of €6 bn in 2011 as part of a strategy leading to a 3% of GDP deficit by 2014, implying an overall consolidation of 15 bn in the 4 year strategy, which contains an annual review. Given the strong fundamentals of the Irish economy, decisive implementation of the programme should allow a return to a robust and sustainable growth, safeguarding the economic and social cohesion.
The programme will also include a fund for potential future capital needs of the banking sector. By building on the measures already taken by Ireland to address stress in its banking sector, a comprehensive range of measures, including deleveraging and restructuring of the banking sector – will contribute to ensuring that the banking system performs its role in the functioning of the economy.
After approval by the Irish government, the programme will be endorsed by the Ecofin Council and the Eurogroup, in line with national procedures, on the basis of a Commission and ECB assessment.”