THE EUROPEAN COMMISSION has dismissed suggestions that Ireland should seek to negotiate a second bailout from the European Union and the International Monetary Fund.
At a press conference today, a spokesman for EU economics commissioner Olli Rehn said discussing a second bailout was “not particularly helpful” given the efforts being made to ensure Ireland complied with the current deal.
“What is important – and essential, in the case of Ireland – is to ensure the continuation of the good job done, up to now, by the Irish authorities in the full implementation of the programme,” Amadeu Altafaj told reporters.
“It is not particularly helpful at this point in time to fuel speculation about a second programme when the first one is delivering, is being implemented,” he added.
Altafaj was responding to comments from Citigroup chief executive Willem Buiter who yesterday said Ireland should have a second bailout negotiated a second deal on a ‘standby’ basis, so that Ireland is not forced to pay penal interest rates on the open market when the funds from the first bailout have been exhausted.
His comments were supported by senior DCU economist Tony Foley, who said Ireland should be “praying” for a second deal given how much cheaper it would be than borrowing from the open markets, which would currently ask Ireland to pay interest rates of around 8 per cent on 10-year borrowing.
“It’s not particular useful to open a public debate about the possibility of a successor programme when we are implementing the first one and it is delivering, in spite of the difficult conditions on the external side,” Altafaj said.
The remarks coincided with the first day of the quarterly visit to Dublin of a team of Troika inspectors gauging Ireland’s performance under the memorandum of understanding for the current bailout programme.
Of the €67.5 billion in loans provided under the first bailout – coming from the European Commission, other member states, the IMF, and bilateral loans from the UK, Sweden and Denmark – Ireland has already drawn down over €30 billion.
It is estimated that the remainder of the bailout funds will be enough to fund Ireland into the second half of 2013.
The National Treasury Management Agency is thought to be preparing some auctions of short-term bonds in the coming months, in a bid to gauge market interest.
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