IMF: Our help is not needed

THE International Monetary Fund has said Ireland does not need its financial assistance and has praised the Government’s efforts to prop up its banking system.

The statement from the IMF will be welcome news for Taoiseach Brian Cowen, who is facing the threat of a “bloodbath” within his own party as backbenchers signal they will support a cabinet member who mounts a heave against him.

Justice Minister Dermot Ahern last night admitted to a “party row” and referred to contact between TDs and ministers to discuss concerns over Mr Cowen.

The intervention by the IMF came as Ireland’s cost of borrowing soared on bond markets. The interest rate demanded by investors hit 6.5% at one point yesterday afternoon.

The IMF and the Department of Finance were forced to soothe investor fears after a rumour that the Government may have to seek outside financial help.

“As we have said before, we do not envision that IMF financing will be needed,” an IMF spokesperson said.

The Department of Finance said there was “no truth in a rumour” that the Government may seek financial aid, insisting it was based on a “local misinterpretation of a research report”.

The National Treasury Management Agency is determined to press ahead with the sale of €1.5 billion in fresh Government debt on Tuesday, despite interest on Government debt hitting record highs on Friday.

Finance Minister Brian Lenihan said the “slight extension” seen in the country’s bond spreads is “normal” before a bond auction.

Asked about the Barclays Capital report that Ireland may need external aid at some point, if conditions worsen, Mr Lenihan told reporters: “What it said was that the Government was taking the right steps at the right time.”

Mr Cowen yesterday said there was “important work to be done for the country in the weeks and months ahead” and the Government needed a “working majority” to do this. He insisted his party will be “held together” by a “duty to do what is right by the country”, as backbenchers quietly discussed the options for a change of leadership in Fianna Fáil.

Ministers, including Brian Lenihan, Eamon Ó Cuiv, Dermot Ahern and Micheál Martin, publicly rallied behind their leader yesterday, playing down any speculation of a leadership heave.

A growing cohort of TDs said it is time for a senior minister to “step up to the mark” after a week of controversy surrounding Mr Cowen’s radio interview on Tuesday morning, hours after he left a drinking session with colleagues in Galway.

But a colleague close to Mr Cowen said he is unlikely to step aside without a fight from a “core group” who still support him. In a warning to other TDs, he said a heave would cause a “bloodbath” and a “split lasting years” in the party.


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