Historic day as EU/IMF officials arrive ... though Taoiseach still insists they are not here to bail out State

THE country’s entire banking sector and the Government’s budget plans will be scrutinised by officials from the EU and the IMF when they arrive in Dublin this morning on what will be a historic day for the country.

Taoiseach Brian Cowen continues to insist they are not here to bail out the country, but preparations are well under way for when the Government decides to ask for help from the international community.

The banks are facing another overhaul. This time, some could be wound up, while shareholders could suffer further losses, Belgian Finance Minister Didier Reynders, who chaired yesterday’s EU meeting, said.

Mr Reynders, who presided over restructuring and closure of Belgian banks two years ago, said he believed it was now “inevitable” that Ireland would need money from the EU/IMF.

While the Government has been at pains to insist they are only contemplating a bailout for the banks, European Economics Commissioner Olli Rehn said the experts would also turn their attention to the country’s finances. In particular, they will study the four-year budget plan being finalised by the Government and designed to cut €15 billion off the country’s budget bill, cutting the deficit from 14% to 3% of GDP by 2014.

Mr Rehn pointed out that it’s not possible legally for Ireland to just get money from the fund to rescue its banks. Any money requested would go to the State and it would be responsible for repaying it.

The team of technical experts from the three institutions will speak to people in the Central Bank, the Department of Finance, regulators and others to get a precise picture of the country’s predicament.

Their report should be ready “in days” officials said, but the Government may want to wait to see if the four-year plan and the December 7 budget reassures the markets and cuts the cost of borrowing before they formally apply for aid.

However, they are involved in a race against time as the ECB says it cannot continue funding the everyday needs of the banks as they have been doing for some time, and large corporate customers are removing their deposits.

To disbelief from the opposition, which claimed he was engaging in semantics, Mr Cowen told the Dáil the Government had not applied for a bailout and was not in talks about one. He also denied his ministers had misled the public on the issue in recent days.

“The statements made by ministers over the course of last weekend and since then have been firmly based on the fact that we were not involved in negotiations and we’re still not involved in negotiations,” he insisted.

But Fine Gael leader Enda Kenny claimed the Government had already raised “the white flag”, and the visiting officials were “coming to dictate the terms of the Irish bailout to the Irish state”.

His Labour counterpart, Eamon Gilmore, said of the officials: “They’re not coming to do their Christmas shopping.”


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