Final bill for bailing out banks could hit €100bn

IRELAND’S final bill for bailing out its banks may be €90 billion to €100 billion because property prices “most certainly” haven’t reached a bottom, said Morgan Kelly, an economist at University College Dublin.

Ireland, which has already injected €62bn into its lenders, may see its government debt rise to €240bn to €250bn as a result, Kelly said in Kilkenny at the weekend.

“We are very far from the bottom” of the real-estate market, he said, and it will take a decade for the economy to recover.

Kelly has been dubbed “Doctor Doom” by the media, after he forecast in 2006 that Irish property prices may decline as much as 80%. Commercial-property prices have fallen 63% since September 2007, according to an index compiled by London-based Investment Property Databank.

Ireland was forced to seek an international financial assistance last year as depositors fled the country’s unprofitable lenders and investors shunned government and bank debt.

Finance Minister Michael Noonan said last week Ireland may beat its 2011 target of reducing its deficit to 10.6% of gross domestic product.

Noonan is seeking to narrow the deficit to 3% of GDP by the end of 2015 from an underlying 12% last year.

Ireland has been locked out of debt markets since last September, and may seek to test investor demand in the second half of 2012 with a sale of Treasury bills, the country’s debt agency said last month.