LEGISLATION PROVIDING for bilateral loans up to € 1.312 billion from Ireland to Greece as part of the €110 billion support package agreed by the euro-zone states and the International Monetary Fund (IMF) is to go before the Dáil next week.
The draft legislation was approved at a Cabinet meeting yesterday morning. The programme of support for Greece extends over a three-year period and the loan amount to be advanced in the first year by Ireland will be just under €500 million.
The Government has said no fresh borrowing will be required as a result of agreeing to provide the loans, as the National Treasury Management Agency (NTMA) has sufficient funds. Under conditions attached to the loans, the Greek government has to undertake what Minister for Finance Brian Lenihan has described as “an ambitious fiscal adjustment” as well as “additional and important structural reforms”.
Taoiseach Brian Cowen briefed the Cabinet on last Friday night’s meeting of heads of government in Brussels which agreed on the immediate creation of a permanent rescue fund for distressed euro countries and for the European Central Bank (ECB) to buy government bonds. Mr Lenihan briefed the Cabinet about the weekend talks among EU finance ministers on the €750 billion rescue fund. The scheme is similar to the Greek plan and will be financed by the 16 euro countries, the IMF and the European Commission.
The euro countries would agree in principle to guarantee loans from a special purpose vehicle up to €440 billion. The guarantee would vary according to each state’s shareholding in the ECB.