Denmark, Norway ready to give loans

BAILOUT:THE DANISH government has said it will provide emergency loans to Ireland – and Norway, which is not in the EU, said it was prepared to examine any request from Dublin for bilateral assistance.

Dutch finance minister Jan Kees De Jager said it would not be a good idea to “throw” Ireland out of the euro, saying that “would provoke a chain of unwanted effects”.

Mr De Jager also argued against allowing “southern” countries to devalue, saying that would hurt exports and the economy.

“It could be better to raise the VAT rate than the corporate tax rate,” he said.

“The amount of money needed to clean up the Irish banking system is now being studied by experts.

“Shareholders and holders of subordinated bonds in Irish banks will have to bleed in a restructuring process.”

Denmark joined fellow non-euro countries Britain and Sweden with an offer of bilateral assistance, a move that reflects the exposure of the Danish-owned National Irish Bank to volatility in the Irish banking sector.

The country’s pledge of assistance is subject to the approval of parliament.

It is understood that between €500 million and €1 billion may be lent, roughly the same as the Swedish offer.

“It is natural to help out Ireland. Ireland needs a helping hand to get back on its feet, that’s why we’re going to help,’’ said Danish finance minister Claus Hjort Frederiksen.

“The help to Ireland will also be to the benefit of the financial and economic stability in the EU.

“It is in Denmark’s clear interest as a small open economy to secure a stable Europe in which the countries’ economies and functioning and growing.”

Following discussions with all parties in the Danish parliament, Copenhagen said that it will start the negotiation of bilateral loan to Ireland as part of the bailout effort.

Norway, cited by its neighbour Sweden as a potential contributor to the aid effort, said it was contributing to the bailout via the IMF but left the door open to bilateral aid.