A EUROPEAN UNION OFFICIAL has said Ireland has begun talks with both the EU and the International Monetary Fund officials about receiving foreign funding for both the government and the national banking sector.

Bloomberg quotes the official – who spoke on the condition of anonymity – as confirming that the talks were underway, and reports that the two-part package would spare Ireland from having to return to the international bond markets in the coming months, as it would itself remain funded in the medium-term.

The so-called ‘dual bailout’ would see the government supplied with fresh funds to help the Irish banking sector as it sees fit.

The current Irish debt crisis has been fuelled by the activities on second-hand bond markets in recent weeks; the National Treasury Management Agency (NTMA), the state agency which borrows on Ireland’s behalf, says the state is funded until the middle of 2011 already, but the scale of an international bailout would see the state being freed from the requirement of having to return to the market for further funding early next year.

The announcement of a finalised bailout would put an end to fears of other Eurozone nations – particularly Spain and Portugal – that nervousness about Ireland would force them into seeking outside help too.

The cost of Irish government borrowing has risen again today, standing at 8.238% at 3:30pm, having stood below 8% overnight.

Taoiseach Brian Cowen has announced his indication to address the Dáil on the state’s financing at 5pm, as finance minister Brian Lenihan prepares to meet his finance minister counterparts from the other 15 Eurozone members this evening – a meeting at which it was earlier reported that the EU would insist a bailout be accepted.

Earlier, however, Europe minister Dick Roche denied reports he had told an ITV News reporter that he expected a banking bailout to be finalised tomorrow.