Irish officials acknowledged for the first time Thursday that Ireland was seeking aid from international lenders.
Ireland had been reluctant to accept any bailout that came with strings attached. But Thursday, Finance Minister Brian Lenihan told the Irish parliament that it would be a “very desirable outcome” if a contingency capital fund could be established with the European Union, the International Monetary Fund and the European Central Bank.
Patrick Honohan, governor of the Central Bank of Ireland, said in an interview on the Irish state broadcaster RTE that “we’re talking about a very substantial loan for sure” and that such a rescue would be “in the tens of billions” of euros.
Ben May, an economist with Capital Economics in London, said the size of any bailout would depend on what the examiners found on the books of the Irish banks. He said that 60 billion euros ($82 billion) might suffice if the amount was to cover only the government’s financing needs for the next few years but that more might be necessary to have firepower in reserve.
Additionally, he said, there was a concern that Irish banks might have trouble rolling over their debt after the European Central Bank began to withdraw the extraordinary measures it used to combat the financial crisis.
Also Thursday, experts from the European Union, the IMF and the European Central Bank arrived in Dublin to review the books of Irish lenders.
“I think we’re moving toward the next stage,” said Pier Carlo Padoan, chief economist of the Organization for Economic Cooperation and Development. “I’m encouraged by this decision; it’s the beginning of the end, hopefully.”
Concerns about Ireland’s fiscal state have contributed to volatility in bond markets in recent days and helped to keep the euro under pressure.
In Greece, where Europe’s sovereign debt troubles first surfaced late last year, the Finance Ministry presented to parliament a 2011 budget that would pave the way for further deep cuts while also increasing sales taxes and redoubling efforts to crack down on tax evasion.
Finance Minister George Papaconstantinou said that the latest measures were ambitious but attainable.
“These are not the desires and wishes of the Greek government,” he said, “but concrete measures that have been agreed” with the European Union and the IMF, which bailed out the country in May.