IMF begins work on rescue package
The International Monetary Fund mission begins its inspection of Ireland’s debt-ridden finances today.
Up to 12 officials, including banking experts and auditors, headed by Ajai Chopra, will join representatives from the European Central Bank and European Commission in poring over the state’s books.
The audit begins amid speculation from Ireland’s Central Bank Governor Patrick Honohan that the state needs a bail-out loan running to tens of billions.
Talks will focus on the planned €6bn Budget savings due on December 7, a four-year €15bn savings plan and the financial blackhole crippling the banks.
The IMF was keen yesterday to stress that it has no social agenda amid fears the poorest in society would bear the brunt of any cuts it sanctions.
Discussions, which both the IMF and the Government describe as “technical”, could run for seven to 10 days.
Pressure on the beleaguered coalition Government intensified yesterday when Mr Honohan said he believed the country would get a multi-billion euro IMF loan.
However, Taoiseach Brian Cowen repeated that “no formal application” had been made for a bail-out or loans but accepted that talks with the EU were intensifying since the meeting of EU finance ministers in Brussels earlier this week.
Mr Cowen also stressed that the country had not surrendered its sovereignty, claiming the economy remained strong and sustainable.
He said letting in the IMF was not shameful.
Former Taoiseach John Bruton, EU ambassador to Washington, described the arrival of IMF officials as a “very, very sad day for Ireland”.
Finance Minister Brian Lenihan appeared to signal the Government’s desired way out of the financial mess – “substantial contingency capital”, or “CoCo” as it has become known in the banking world.
Money would be borrowed from the IMF and the EU, with other bilateral funds paid into a pot, in effect creating a massive cash buffer for the banks in the event of another blackhole.
The loans would be guaranteed by an elaborate share scheme triggered if the banks’ finances hit a red alert mark. Lloyds of London adopted a similar approach to tackle funding issues.
