Noonan rejects second bailout possibility as 'idle speculation'

Thu, Jan 12, 2012, 00:00

THE POSSIBILITY of seeking a second EU-IMF bailout has been rejected outright by Minister for Finance Michael Noonan as “ludicrous”.

He dismissed the prospect as “idle speculation” by economists. Analysts have said if borrowing costs are still about 8 per cent in 2013, the Government will have to seek further funding, which currently costs over 3 per cent.

Plans to exit the bailout programme on schedule are seen in some quarters as increasingly difficult, as the euro zone debt crisis hits growth and keeps sovereign debt yields at a very high level.

Speaking to reporters on his way into yesterday’s Cabinet meeting, Mr Noonan said the troika review had “started very well” and he described it as “very positive”.

“We’re meeting all targets and it’s ludicrous to be talking about a second bailout when we’re in, and meeting all the targets in, the first programme.

“We’re a year into the rescue programme which was negotiated by the previous government and we’re fully funded till the back end of 2013, so it’s really speculation by economists who, at the start of the new year, speculate on these matters.”

The Minister also rejected the prospect of seeking an extension to the present bailout.

“Growth forecasts are down but we have taken that into account in forming the budget and we have taken account of the reduction in growth in putting the programme in place which will take us to a deficit of 8.6 per cent at the end of the year.

“Our figures are quite robust and we are quite confident of meeting those targets. So the issue of a second bailout doesn’t arise at all.

“Anyway there is a commitment which you would have seen in a heads of state communique about two meetings back where the European authorities and the IMF are committed to providing a flow of funds for any country which fulfils the terms of its programme even if it’s not back in the markets. So there is that commitment in principle as a backstop.

“But there is no question of the Government even considering a second bailout,” he reiterated.

An EU source quoted by Reuters said this week there were new structures – such as the ability of Europe’s rescue fund to give precautionary credit lines – that could provide fresh funds to Ireland.