EU to sign Irish loan deal before Christmas

THE EU will sign the loan agreement with Ireland before Christmas and be ready to raise the bailout money in the new year, the head of the European Financial Stability Fund announced following last night’s eurozone finance ministers meeting in Brussels.

There was no agreement on creating eurobonds — a loan facility that could take all eurozone countries out of the markets when looking for money — or of increasing the €750 billion fund despite pressures from some governments and economists.

But it was clear that the ministers are moving closer to formulating some kind of eurobond perhaps by putting money into a debt agency.

Jean Claude Juncker, who chaired the meeting said they discussed Ireland’s programme in detail and that the €85bn EU-IMF loan will mean the country will not need to borrow from the markets for two years.

Ireland’s share of the Fund will be less than one tenth of the overall lending capacity “so there are sufficient resources left for other cases if required”, said the EFSF head, Klaus Regling.

Brian Lenihan was not at yesterday’s meeting, remaining in Dublin finalising the budget.

The meeting spent a lot of time discussing Spain and Portugal – both countries tipped by some economists to be the next forced to borrow from the EU-IMF.

Mr Juncker said that they did not discuss a eurobond but he wrote an article with Giulio Tremonti, the Italian Finance Minister about the issue for yesterday’s Financial Times, “to show it is not as stupid as it sounds”.

European Economics Commissioner Olli Rehn showed his interest in the idea saying it was “intellectually attractive” and that the Commission was willing to discuss and study whether it was legally and technically feasible and practical.

German Finance Minister Wolfgang Schauble said that while the idea of eurobonds was not on the table, “give us a few months to discuss it”.

German chancellor Angela Merkel said that the current Treaties would not allow for eurobonds. She also said that “for the time being” she saw no need to increase the EU-IMF fund.

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