ECB chief backs backstop credit line

in Frankfurt

Ireland’s international lenders believe it would be “useful” for Ireland to deploy a precautionary credit line when its bailout programme finishes, the president of the European Central Bank said yesterday.

Speaking in Frankfurt following the ECB’s monthly rate-setting meeting, Mario Draghi said that while the decision was one for the Irish Government, the ECB, the European Commission and the IMF “would say that certainly it would be useful to have a precautionary programme in place”, while acknowledging Ireland’s success under the programme had been significant.

His comments come among increasing signs that Brussels will back any decision by Ireland to exit the bailout programme unaided. There is a growing sense that Ireland should return to full private market funding at this juncture, rather than face a similar problem in a year’s time when any precautionary credit line would expire. Ireland’s bond yields have stabilised at about 3.5 per cent – far lower than many of the non-programme countries in the euro zone. However, the ECB is understood to be strongly in favour of deploying some sort of backstop measure as Ireland prepares to become the first country to exit and IMF-EU programme.

Surveillance
Despite repeated utterances that the decision is one for Ireland, the country will continue repaying its loans to the EU and IMF long after the programme finishes, and as a result will continue to be subject to post-programme surveillance.

Mr Draghi also warned that further action, particularly on the banking sector, is required in Ireland despite the country’s success in implementing the bailout programme.