FRANCE:IRELAND HAS not made a formal request for aid from the European Union, but its plan to restore a better budgetary balance must be followed through, French finance minister Christine Lagarde has said.
“There is no request for aid,” Ms Lagarde said after speaking to European counterparts by telephone.
“The Irish Government took supplementary budgetary measures aimed at restoring a better budgetary balance. That plan has to be brought to a successful conclusion,” she said, adding that close attention would have to be paid to “the restructuring which is under way in Ireland now”.
A French source said Paris was less pessimistic than Berlin about Ireland’s situation, and had a more “flexible” stance towards the possibility of Dublin availing of the bailout.
Paris does not believe it is inevitable that Ireland will request a rescue package, the source suggested. However, the French are anxious that Ireland takes the “necessary decisions” to calm markets and ease pressure on the euro.
Officials in the French capital believe Germany, having seen protracted uncertainty over the Greek bailout exacerbate the situation earlier this year, are keen to see action taken quickly this time to ease pressure on the currency.
The French still believe it is possible that, by taking tough decisions at home, an Irish bailout could be avoided.
Meanwhile, on a visit to Paris, Greek prime minister George Papandreou said Germany’s insistence that banks and bond markets must in future share the pain of any eurozone sovereign debt default could push some economies towards bankruptcy.
“Some have suggested, such as the German government, that bond markets, banks that finance nations with high debt should be prepared to take the cost of a possible default or haircut in the future,” Mr Papandreou said.
This “created a spiral of higher interest rates for countries that seemed to be in a difficult position, such as Ireland or Portugal,” he said.
“This could create a self-fulfilling prophecy . . . It’s like saying to someone in difficulty, ‘I will put an even higher burden on your back’. This could break backs. This could force economies towards bankruptcy,” claimed Mr Papandreou.
The EU’s statistics agency, Eurostat, yesterday revised upwards Greece’s 2009 deficit for a third time, to 15.4 per cent of GDP compared with a previous 13.6 per cent estimate.
Greece’s finance ministry said it would still manage to bring the shortfall below the euro zone’s 3 per cent of GDP ceiling in 2014 despite the revision. It said that this would start with a six-point cut this year to 9.4 per cent of GDP.
