Bailout for Greece ‘will not restrict budget’

Finance Minister Michael Noonan has ruled out any new bailout for Greece restricting what the Irish Government can offer in the next budget.

Coalition figures stressed last night that it was up to Greece on whether or not they wanted a third bailout programme, ahead of crunch talks today between EU leaders on its future in the eurozone.

Government sources said their preference is to examine restructuring Greece’s debt over a long period if Athens requests a third financial aid programme.

Finance Minister Michael Noonan, before flying to Brussels for a meeting with European counterparts, said any new bailout would not impact on spending here.

Ireland could have to pay €1bn or 2% of a new bailout for Athens, Government figures say, if a new programme is in the order of €50bn as suggested by the International Monetary Fund.

But the funds would be lent under the EU’s permanent bailout fund, the European Stability Mechanism (ESM), and therefore not affect spending here as Ireland has already paid €1.2bn into this and further funds needed for Greece would be drawn from this.

However, if Greece was to default on its new bailout, the losses would go back onto the Irish government’s balance sheets, the Department of Finance confirmed.

The amount available to Greece for any new bailout is also dependent on whether the IMF come on board and to what extent EU countries will contribute, especially given that a new loan has to be approved by some members’ parliaments.

Mr Noonan told RTE that any new bailout fund for Greece would not impact on Ireland’s budget.

“Will it have a budgetary effect? No. But there’s a possible potential liability in the future, but it wouldn’t have a budgetary effect for the next budget.”

Department officials though did concede that the funds if needed, while already paid into the ESM, would be taxpayers money.

Earlier, junior finance minister Simon Harris said is was too early to say whether the funds for an Irish contribution of €1bn would come from the ESM or elsewhere.

Enda Kenny, during a visit to Connemara in Co Galway, said the next move was up to the Greek government.

“If they wish to have a third bailout or a third programme put in place with monies made available then they have got to ask for that and that means that they have got to sit down and restart negotiations again.”

While the European Central Bank is expected to meet this week and discuss ongoing concern about the cash flow in Greek banks, Mr Kenny said it was independent.

Mr Kenny also said that while Greeks had voted against their bailout, other countries and their people might have alternative views about funding loans to Athens.

Foreign Affairs Minister Charlie Flanagan said that the situation in Greece was “grave” and that the situation was now “uncharted waters” for everyone in the eurozone.

He advised Irish travellers going to Greece on holidays to take cash rather than rely on their credit cards.

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