THE PROGRESS IRELAND is making towards exiting its bailout programme will be on the agenda of eurozone finance ministers meeting in Luxembourg today.
Following the Taoiseach’s confirmation at the weekend that the country will exit the Troika programme on 15 December, the question now is whether Ireland will need a precautionary credit facility to ease it back into normal lending markets.
Both Michael Noonan and EU economic commissioner Olli Rehn hinted in recent days that this may not be needed.
Any arrangement would require a formal request from Ireland which would then be considered by all EU finance ministers but the country has so far made no request for such a programme.
Whether or not it does will depend largely on whether the economy continues to grow, unemployment continues to fall and the yield on Irish bonds remain low.
With Noonan focussed on the Budget he will be announcing tomorrow junior finance minister Brian Hayes is representing the Irish government at the talks today and tomorrow where eurozone ministers will be joined by the 11 non-euro finance ministers.
As well as Ireland finance ministers will also try to resolve deep differences over how to supervise, and if necessary close, failing banks before they can plunge the economy into crisis.
Driven by the debt crisis, the eurozone has already agreed a Single Supervisory Mechanism (SSM), due to be operational late next year, to regulate the sector under the European Central Bank.
The next step is a Single Resolution Mechanism (SRM), open also to non-euro members who want to take part, to close banks that cannot be rescued.
Top EU and ECB officials say the SRM is essential to complement the SSM.
But many member states, including EU powerhouse Germany, are reticent, especially over how to fund the SRM’s role which Berlin feels requires changes to the bloc’s core treaties — a fraught prospect.
A stop-gap solution might be to tap the European Stability Mechanism, the eurozone’s permanent bailout fund, which has already helped Spanish banks.
One EU official, conceding that the SRM “is still quite some way away” from agreement, said “the assumption is that the ESM could play a role” and then be repaid by an industry levy.
- additional reporting AFP
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