Rumour of second bailout ‘not helpful’, says EC

TALK about a second programme or bailout for Ireland is not helpful, the European Commission has said following media speculation about the issue.

Citigroup chief economist Willem Buiter’s comments in Dublin earlier in the week warned that cheaper loans or private sector involvement were needed, together with a refinancing of €30bn of promissory notes for Anglo Irish Bank.

European Commission spokesperson Amadeu Altafaj Tardio said talk of a second bailout was not helpful and that it was essential to continue the good work done up to now.

“It is not particularly helpful to fuel speculation about a second programme when the first one is being done and bringing growth back, showing growth in 2011, exports doing well and progress in the banking sector positively assessed positively by the troika,” said Mr Tardio.

“Structural reforms can further boost this growth. It is not particularly useful to open a public debate about a successor when we are in the first programme and it is delivering.”

Mr Buiter said the country’s deficit position was bad and that there needed to be some form of official concessions on the terms and conditions of the country’s financing or private sector involvement — something the Government is resisting on the grounds that it would take from the country’s credibility with the markets.

His comments supported the Government’s efforts to get political agreement on borrowing an additional €30bn from the European Financial Stability Facility for a long period of time and at a low interest rate to refinance the expensive money the state borrowed to recapitalise Anglo Irish Bank before the sovereign bail-out.

It would be “a material help” he said.

Euro Commissioner Olli Rehn told MEPs that the austerity measures imposed on Ireland were paying off, but he was challenged to prove this by independent MEP Marian Harkin.

“How exactly are they paying off when Ireland’s GNP has decreased for the last four years; when unemployment remains sky-high; when Irish debt has yet to peak and exports remain fragile?” she asked him.