GERMAN FINANCE minister Peer Steinbrück has warned that Ireland and other eurozone members may face payment difficulties and require assistance from other members of the bloc.
Mr Steinbrück said that such a show of financial solidarity, though not written into the eurozone rule-book, may nevertheless be required for practical reasons.
“In the eurozone we have countries that are clearly getting into difficulties with their payments,” said Mr Steinbrück late on Monday evening in Düsseldorf.
“The eurozone treaties don’t foresee any help for insolvent countries, but in reality the collective would have to be helpful to those in difficulty.”
Asked to name countries facing concrete problems, Mr Steinbrück said that “Ireland is in a very difficult situation”.
A spokesperson for the ministry said yesterday that the finance minister was “listing hypothetical options”.
“He was merely reacting to the question of what one would have to do in a theoretical situation and, in that situation, eurozone countries would have to consider helping out,” the spokesperson said. “The option is not ruled out but neither is it a serious consideration at the moment.”
The Department of Finance said yesterday it was committed to restoring public finance sustainability in the five years to 2013.
Ireland had a low debt level, the department said, adding that the General Government Debt to GDP ratio was 41 per cent at the end of 2008, well below the EU average of 60 per cent.
Leading German economists suggest it is unlikely, regardless of eurozone rules, that a member would be allowed fail or forced out.
“The political and economic consequences are too high for the country that leaves and for those that remain,” said Michael Klawitter, foreign exchange expert at Dresdner Kleinwort in the Financial Times Deutschland.
Ratings agency Moody’s said last week that, of all nations with the top credit rating, Ireland was among the most vulnerable.
Yesterday a Moody’s spokesman told Bloomberg that Ireland remains a “creditworthy issuer” with only a “remote” chance of defaulting on its debts.
