IRELAND WILL provide just under €500 million in the first year of a three-year bilateral loan package to Greece, Minister for Finance Brian Lenihan said last night.
The total amount in Irish loans to the Greek government through the European Commission would be up to €1.312 billion, he said.
This is Ireland’s share of the total €110 billion in loans from the eurozone member states and International Monetary Fund but the Minister stressed that “very strong conditions” were being imposed on the loans.
He had been closely involved in the decision-making process with the other eurozone finance ministers. There were sufficient funds in our National Treasury Management Agency (NTMA) to finance the Irish loans. “We don’t require fresh borrowing at this stage,” Mr Lenihan said.
There was a provision in the agreement on the loan package that the member states were not to be at a loss. The loans would “not impact on member states’ deficits,” he added. “Ireland is lending money to Greece at a profit for Ireland, or at worst on a repayment basis.” The Minister briefed the Cabinet on the agreement yesterday.
Ministers had approved the agreement in principle and instructed the Attorney General to prepare the necessary legislation.
He expected the heads of government in the euro zone to sign off on the final text of the agreement at their meeting in Brussels on Friday night. In line with normal Irish practice, the international agreement would have to be appended to the Bill and this might cause some delay.
“I would anticipate that the Government will approve the Bill next Tuesday. We will then publish the Bill,” Mr Lenihan said. He expected there would be a “full-scale debate” in the Dáil the following week.
The Minister accused Fine Gael leader Enda Kenny of making “highly irresponsible and erroneous” comments in relation to the Greek situation. He said Mr Kenny had suggested Irish banks stood to lose a potential €7 billion in the event of Greek insolvency.
Mr Lenihan had discussed this matter with the NTMA. Ireland’s exposure as a State was €1 million, mainly in Greek corporate bonds, and the exposure of the banks that were subject to State guarantee was “less than €40 million”.
Commenting on the wider implications of the Greek crisis, the Minister predicted “far tighter economic surveillance” in the euro zone to ensure that member states did not “diverge so radically” from European norms. In a statement, Fine Gael finance spokesman Richard Bruton said the action taken so far “has not stemmed a crisis of confidence in the ability of the euro zone to handle the internal imbalances between its members”.
“Countries like Greece and Ireland will only be in a position to regain fiscal health if they can export their way back to growth and rising employment. This requires a wider EU strategy that supports purchasing power in core European markets.” He added that: “Depressed and shrinking markets will make it extremely difficult for countries like Greece to refloat their exporting sectors.”
Mr Bruton said the European Central Bank “must realise that its desire to tighten monetary policy as banking stability re-emerges must take account of the severe strains that are emerging in peripheral eurozone countries”.
“While it is easy to point to institutional impediments . . . in the end this comes down to a need for greater EU solidarity and political will,” Mr Bruton added.