RESCUE PACKAGE:CENTRAL BANK governor Prof Patrick Honohan has said his expectation is that the Government will be required to accept a "very substantial" loan amounting to "tens of billions" of euro in any rescue package agreed with the EU and IMF.
Prof Honohan, speaking from the European Central Bank in Frankfurt, said it was his expectation that it was likely to happen, and that was why large technical teams from the EU, the ECB and the IMF had arrived into Ireland.
“The ECB would not send large teams if they didn’t believe first of all that they could agree to a package, that there is a programme that is fully acceptable to them that could be designed, and that it is likely to be acceptable to the Irish Government and the Irish people.
“I think this is the way forward. Market conditions have not allowed us to go ahead without seeking the support of our international collaborators.”
He said the expectation was that a loan would be made available and drawn down if necessary.
"We're talking about a very substantial loan for sure – tens of billions, yes. I don't know that any precision has been put on it yet," he told RTÉ's Morning Ireland.
The interview was instigated by Prof Honohan. The station was contacted by phone by Prof Honohan’s press officer and the governor spoke on the programme shortly thereafter.
A spokesman for the Central Bank said Prof Honohan had had an open invitation for some time to appear on Morning Ireland.
“The governor decided this morning was the time to do it,” he said.
In the interview Prof Honohan said “it would be a large loan because the purpose of the amount to be advanced or to be made available to be borrowed is to show that Ireland has sufficient firepower to deal with any concerns of the market”.
“That’s the purpose of it. So we’re talking about a very substantial loan, for sure.”
He said the huge sums of money put in by the Government to support the banks had not generated sufficient confidence.
One reason for the lack of confidence, he said, was the concern of investors about the Government’s finances and the prospects for growth and employment.
Speaking later yesterday, Taoiseach Brian Cowen sought to distance the Government from Prof Honohan’s comments, saying that his view did not necessarily reflect that of the Government. “The governor gave his view. He is entitled to give his view.”
Mr Cowen also said Prof Honohan’s comments were similar to the view of the ECB.
“The governor is part of the governing council of the ECB, and it is a matter of public knowledge what the ECB general view has been,” he said.
“We understand all that. At the end of the day, we have to determine what is the best option for our country and for our people at the time.
“As I have said, it will require further consideration.”