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Ireland will still need second EU/IMF bailout

26 July, 2011 - by Pearse Doherty TD

Speaking in advance of today’s Finance Committee briefing by Minister for Finance Michael Noonan on last Thursday’s EU summit deal, Sinn Féin Finance spokesperson Pearse Doherty said that, “Ireland would still need a second EU/IMF bailout despite the interest rate reduction”.

Deputy Doherty said:

“Sinn Féin welcomed the interest rate reduction secured at last Thursdays EU debt crisis summit. Indeed when the Government seemed to accept that the best deal on offer was a 0.6% reduction on new draw-downs Sinn Fein argued strongly for a 3% reduction on the basis that our European partners should not profit to the tune of €9 billion from emergency loans provided to Ireland.

“However notwithstanding the positive news of a 2% reduction in the interest rate payments and the availability of extended maturities it is my firm belief that in the second half of 2013 Ireland will be unable to return to the markets and will need additional financial intervention by the EU and IMF.

“I believe this because the EU summit failed to deal with the key issue underlying the Eurozone debt crisis, namely the unsustainability of the debt held by Greece and Ireland.

“The only way to end this Europe wide crisis is to reduce the overall level of debt held in the EU periphery. Ruling out private sector burden sharing and loss sharing with the ECB on the Anglo Irish promissory note effectively closes the door to any real resolution of Ireland’s debt crisis.

“Indeed the planned injection of €18 billion later this week by the Government in the new pillar banks will make such burden sharing even more difficult.

“The European Council accepted some level of private sector involvement in addressing the Greek debt. The Irish government needs to insist that a similar approach be extended to Ireland.

“Without such burden sharing there is simply no way that the Government can return to the markets in 2013. The only other course available to them will be to seek additional financial intervention from the EU and IMF, further extending the harsh reality of austerity beyond 2013.

“This will do nothing to reduce our debt burden, much of which is not sovereign debt but reckless private sector banking loans. It will also do nothing to assist economic recovery.

“We urgently need a new approach to that being pursued by the Government and their EU counterparts. This approach must be focused on reducing the debt in a meaningful way while investing in economic and social recovery.” ENDS

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