Ireland can avoid borrowing further at high rates this year, NTMA claim

IF the cost of borrowing continues to soar, Ireland can avoid having to borrow further this year at the high rates now being charged by international lenders.

That was confirmed by the National Treasury Management Agency yesterday, who also said Ireland’s funding position will not be undermined by the crisis engulfing the Greek economy.

The agency has up to €23 billion in cash reserves for the past two years that it can call on to cushion Ireland’s debt problem.

This year, the state has raised €12bn so far to fund its €20bn borrowing requirement and also had a carry-over of €5bn in funding not drawn down in 2009, leaving it just €3bn to borrow to fund the current budget deficit for this year.

A spokesman for the NTMA said that with the cost of funding to Ireland rising sharply, we can avoid borrowing any further money this year if bond markets do not improve.

The agency “will keep its options open and will continue to monitor the situation as it evolves,” he said.

Proposals to ease the mounting pressure on Greece came yesterday as policy makers signalled the country may get three years of financial aid to help it manage its debt burden and avoid a default.

IMF managing director Dominique Strauss-Kahn raised further concerns when he said the country could need up to €120bn from the rest of Europe, not the €45bn already agreed.

Fears have been expressed that Germany may balk at the bailout, but such action was dismissed by Dan O’Brien, chief economist at the Economist Intelligence Unit. “The only thing worse than bailing out Greece is not bailing it out”, he told RTÉ News last night. The fallout from such a move would cause a financial crisis across Europe and could lead to the break up of the euro, he

Meanwhile, Fine Gael deputy leader Richard Bruton accused the Government of being oblivious “to the very real threat of Irish banks being exposed to billions of euros of Greek debt”. Some estimate the exposure at up to €7bn in loans that are now of questionable worth, he said.