Terms of bailout 'must be applied'


EU-IMF DEAL:THE EUROPEAN Commission stressed on the eve of polling day that the EU-IMF bailout deal stands as an agreement with the Irish State and not “any particular government”.

At the very end of an election campaign marked by Opposition demands to renegotiate the terms of the rescue, a spokesman for economics commissioner Olli Rehn made it clear that the incoming government will have to execute the bailout programme.

Saying the “main outline” of the plan must be applied, he told reporters in Brussels that the EU authorities will have discussions “as necessary” with Dublin to ensure the plan is effective and reflects the economic situation.

“As you know, there is annual adjustment within the programme to take account of the evolution of economic indicators,” he said.

He acknowledged talks about the possibility of reducing the interest rate on loans to any bailout recipient but said there was nothing new to say about talks on reform of the euro zone bailout fund. “The citizens of Ireland have an important date with democracy tomorrow. They’ll be electing a government, the people who’ll be leading the country and managing the economy of the country over the next few years,” he said.

“In other words, they’ll have an important job to do because they will be applying the programme which was negotiated with the EU, the IMF and the European Central Bank and their international partners, and basically that’s all I would wish to say at this stage, the day before the election.”

While saying he had made big efforts not to become involved in the election debate, he said the plan was agreed on the basis that it was a programme for the Republic of Ireland.

“Mr Rehn has said in this press room and elsewhere that this agreement, it’s an agreement between the EU and the Republic of Ireland, it’s not an agreement between an institution and a particular government,” he said.

“It’s on the basis of a negotiated programme which was approved with the government of Ireland and which in its main outline has to be applied. And it will enable the Irish economy to restart on a more solid basis with more solid growth, the banking sector serving the real economy, more transparency and the Irish people will no longer pay the cost of excessive risk-taking and bad management.

“That’s the aim of the programme. That’s how it was perceived by all the stakeholders in the discussions . . . and it’s important that that programme be applied.”

As the German parliament prepares to rule out key proposals to reform the bailout fund as negotiations intensify next month, Mr Rehn’s spokesman said the prime motivation behind the initiative was to ensure the stability of euro members such as Germany.

“I would like to emphasise that indeed the reinforcing of the financial backstop is an essential component of the comprehensive response to the crisis and that the ultimate goal of having consistent financial backstops – the current ones and the future one – is to ensure to safeguard the financial stability of the euro area as a whole but also Germany and member states of the euro area.”