Ireland bailout finally agreed
(29 November 2010 – Europe) The European Union nations have finally agreed on a €85 billion (A$150 billion) bail-out package for Ireland, a positive sign for the debt-stricken country.
According to a statement by the Irish government, the country will take €10 billion immediately to boost the capital reserves of its banks, while another €25 billion will be set aside as a reserve for the banks.
The Irish government's public finances will receive €50 billion, to be drawn upon as necessary.
The statement said the International Monetary Fund, the 16 eurozone nations and the European Commission will be involved. Britain, Sweden and Denmark will offer bilateral loans.
Irish Prime Minister, Brian Cowen said that the package will provide Ireland with vital time and space to successfully and conclusively address the unprecedented problems that it has been dealing with since this global economic crisis began.
'Most importantly of all, if we didn't have this program, we would have to go back to the markets, which as you know are at prohibitive rates,' Mr Cowen said.
Of the €85 billion, Ireland will contribute €17.5 billion of its own money - transferring cash from its pension reserves, previously prohibited by EU law, to help fill the gap in its government finances.
The statement says the average interest rate Ireland will pay on its loans is 5.8 percent. This total reflects higher rates to be charged by EU sources, and lower rates from IMF and national donors.
Greece is paying 5.2 percent interest on its own bailout from May. Ireland's aid package includes loans that range from 3 to 7 1/2 years, longer than the Greeks' three-year deal.
The European Commission granted Ireland an extra year to bring down its deficit to within the EU limit of 3 percent of GDP. It will now have until 2015, compared with 2014 previously.
The Irish government's public finances will receive €50 billion, to be drawn upon as necessary.
The statement said the International Monetary Fund, the 16 eurozone nations and the European Commission will be involved. Britain, Sweden and Denmark will offer bilateral loans.
Irish Prime Minister, Brian Cowen said that the package will provide Ireland with vital time and space to successfully and conclusively address the unprecedented problems that it has been dealing with since this global economic crisis began.
'Most importantly of all, if we didn't have this program, we would have to go back to the markets, which as you know are at prohibitive rates,' Mr Cowen said.
Of the €85 billion, Ireland will contribute €17.5 billion of its own money - transferring cash from its pension reserves, previously prohibited by EU law, to help fill the gap in its government finances.
The statement says the average interest rate Ireland will pay on its loans is 5.8 percent. This total reflects higher rates to be charged by EU sources, and lower rates from IMF and national donors.
Greece is paying 5.2 percent interest on its own bailout from May. Ireland's aid package includes loans that range from 3 to 7 1/2 years, longer than the Greeks' three-year deal.
The European Commission granted Ireland an extra year to bring down its deficit to within the EU limit of 3 percent of GDP. It will now have until 2015, compared with 2014 previously.
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