Ireland to have Greek-style financial rescue: sources

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November 12, 2010 19:50

Irish protestors took to the streets in Cork to denounce the multi-billion euro banks bailout by the government last year. Photo - Hilary Quinn

Who: Government of Ireland.

What: Irish Republic is in talks to receive Greek-style emergency rescue from the European Union, Reuters quoted unnamed sources in euro zone in its report. Jose Manuel Barroso, the European Commission president pledged an EU bailout if needed. “What is important to know is that we have all the essential instruments in place in the European Union and euro zone to act if nececessary, but I am not going to make any speculation,” Barroso said in a statement. Ireland’s Finance Ministry, however, insisted “there are no talks on an application for emergency funding from the European Union.”

Where: The European Commission president issued his statement in Seoul, ahead of the G-20 leaders summit.

When: The speculations gathered momentum on Thursday when Ireland’s cost of borrowing hit fresh record highs, fuelling fears that the eurozone debt and deficit crisis could be entering a dangerous second phase just six months after a bailout of Greece.

Why: Fresh concerns by financial analysts about the country’s ability to reduce the public debt that ballooned due to bank bailouts have increased borrowing costs for Ireland. Private bond holders in the country worry they could be forced to bear costs of any bailout by accepting a reduction of the value of their holdings. Greece was bailed out in May this year by the EU and the IMF with an enormous €110bn ($150bn) rescue package as it came close to default, battering the eurozone.

How: Euro Zone sources said Ireland would get assistance from the EU’s European Financial Stability Facility (EFSF) money. The EFSF, set up in May this year, can provide up to 440 billion euros in emergency loans to crisis-hit members of the 16 state euro zone. Dublin is constantly denying it will seek EU assistance. “Ireland is fully funded into the middle of 2011,” the Finance Ministry said in an e-mail today.

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