A member of the Government has denied admitting that Ireland is on the verge of finalising acceptance of a European bailout in order to put an end to speculation on Ireland’s fiscal future.
Minister for European Affairs, Dick Roche, has denied reports saying he believed the current European debt crisis – being mostly fuelled by fears that Ireland will default on its bonds, dragging down other weaker Eurozone nations with it – would be resolved tomorrow, when Ireland would accept a bailout on behalf of its banking sector, providing it with new liquidity.
The crisis over Irish borrowing has seen the ability of Irish banks to borrow cash from foreign institutions, in order to fund their daily operations, massively compromised – with the overnight interest rates being demanded of them higher than the banks can afford.
The admission was supposedly made in an interview with ITV News’ economics editor Daisy McAndrew, and followed an interview with BBC in which Roche said that European financial ministers had no need to panic about the Irish financial situation, and that there was no need for Ireland to seek a sovereign bailout.
The admission about the weak situation of Ireland’s banking sector, however, will further strengthen calls on Brian Lenihan from his Eurozone counterparts to accept a bailout when the 16 Eurozone finance ministers meet this evening, and the European Union’s 27 finance ministers meet tomorrow.
McAndrew later tweeted a clarification that Roche believed a resolution to be likely tomorrow, rather than today, and that the bailout would be specifically to avoid a banking default rather than a sovereign one – suggesting that Roche believed a more formal bailout procedure will be initiated at the larger meeting tomorrow.
RTÉ’s News at One reported, however, that Roche denied making such a claim or admission.
Ireland had up until now steadfastly insisted it did not need a bailout in respect of the state, though it had not made public comment about the funding of the European banks.
The balance sheets of Irish banks have been hit as many fear the sector could collapse; Bank of Ireland last week acknowledged that it had lost €10bn in capital in the third quarter as investors remained worried about the prospect of the bank guarantee being withdrawn and deposits being put at risk.
It was earlier reported that EU sources were virtually insistent that Ireland accept international assistance at today’s meeting, with other states – Spain and Portugal in particular – fearful that the toxic reputation of Irish bonds could result in their countries also struggling to borrow on the world’s markets.
The price of Irish 10-year bonds has risen today, standing at 8.143% as of 1pm this afternoon, compared to their rate at 7.963% when trading opened this morning.