IRELAND WILL struggle to avoid an intervention by the International Monetary Fund and the European Union, the Belgian finance minister Didier Reynders said yesterday.
“It will be very difficult for the ECB to go further . . . in providing liquidity to some banks in different member states and maybe first in Ireland,” he told reporters.
Belgium holds the presidency of the European Union.
When economics commissioner Olli Rehn was asked whether he agreed with euro group chief Jean-Claude Jüncker that the Irish authorities would have to decide quickly if they wanted aid, he indicated he was “in broad agreement” with Mr Jüncker.
“Each one of us may use our own words but indeed we mean the same,” said Mr Rehn.
The commissioner also made it clear that “conditions” would be built into any aid plan.
“In this kind of a programme you have always fiscal and economic conditions, which would be based on the four-year fiscal plan and next year’s budget,” he said. “They are by and large in line with revised stability programme of Ireland and we endorse these objectives.
“On the other side, there is the question of the restructuring of the banking sector and there the obvious goal is that the Irish banking sector has to be made viable and sustainable, which will require quite some reorganisation and restructuring in that particular area.”
The president of the European Commission, José Manuel Barroso, said that Ireland needed to address the problems in its banking sector “speedily and decisively to pave the way of full confidence to be restored”.
“In this context, the Irish authorities are committed to working with the commission, ECB and IMF, to determine the best way to deal with market risks, especially as regards the banking sector,” Mr Barroso said.
British chancellor George Osborne disclosed that he had had “a number of discussions’’ with Minister for Finance Brian Lenihan about the Irish economic situation as he declared his government’s willingness to contribute to an EU/IMF aid package.
Telling reporters that the Irish authorities had not asked for assistance, Mr Osborne said the intervention came “entirely off our own bat”.
Ireland was Britain’s nearest neighbour and was the only state with which it shared a land border, he added.
His guiding approach was that it was in Britain’s national interest that the Irish economy was successful and its banking sector stable. “Britain stands ready to support Ireland in the steps it needs to take.”
Mr Osborne declined to specify any aid mechanism, saying a number of different avenues were open, nor would he put a figure on the amount of funding that he might contribute.
He also left open the question of whether bilateral loans or British involvement in the euro rescue mechanism was in the offing.
Britain’s interest in helping did not stem from concern about the impact of the Irish economic situation on British banks, whose exposure to Ireland stood at some $222.4 billion (€165 billion) in March and exceeds the exposure of either German or American banks.
“The UK banks have passed stress tests, the UK banking system is well capitalised,” Mr Osborne said.
“Our engagement in this is because we are good neighbours of Ireland, not because we have particular concerns about any particular UK bank.
“The Bank of England and the FSA [Financial Services Authority] have not expressed to me any particular concerns about any particular UK banks.”
Mr Osborne’s intervention came early in the morning after the EU finance ministers backed an intensification of preparatory talks on a rescue package between the Government, the European Commission, the European Central Bank (ECB) and the IMF.
As he prepared to leave Brussels yesterday afternoon, Mr Lenihan said it was a matter for the British authorities themselves to decide whether they provided aid to Ireland.
In some fleeting remarks to reporters, the Minister said that there was “full support” for Ireland within the wider group of EU members following the euro group meeting.
“There was a very, very positive reaction, a very supportive reaction from the wider European family.
“Britain in particular is very anxious to help if help is needed,” said Mr Lenihan.
