Europe is more concerned about the financial crisis in Greece triggering problems in larger economies such as Spain than Portugal and Ireland, Minister for Finance Michael Noonan said today.
"The European authorities are more worried about countries like Spain than they are about Ireland and Portugal," Mr Noonan said during a radio interview.
"The authorities that I have spoken to believe they can prevent contagion spreading to Ireland and Portugal but they have some concerns about the bigger European countries, and they are going to draw the line there.
"I presume they will bring other policy instruments forward as necessary," Mr Noonan said on RTÉ radio, adding he expected the Greek government to win a crucial parliamentary vote on austerity measures this week.
But he said it was unclear whether Athens would be able to generate the additional revenues earmarked in the austerity package.
"I would be more worried about Greek failure to implement what they have agreed to in the autumn because with the best will in the world their administration doesn't seem to be very effective.
"Tax in Greece and their collection system doesn't seem to be very good and it's a matter of speculation as to whether they can fulfill the commitments they are making or not."
The Irish Government has said it will make a tentative return to debt markets in the second half of next year but it has also insisted it has enough funds from its existing €85 billion EU-IMF bailout to see it through to the middle of 2013.
Mr Noonan said the savings Ireland was making on imposing losses on junior bondholders in the country's banks could help fund the sovereign till the end of 2013.
"We have sufficient money under the bailout programme in all eventualities to mid-2013, but there is the possibility of having extra money for the second half of 2013."
Irish consumer demand dropped 1.9 per cent in the first quarter, on a seasonally adjusted basis, data last week showed, but Mr Noonan said he was hoping anecdotal evidence of a rise in tourism would help revive domestic demand.
"We think that there will be growth on the retail side through tourism," he said.
Last week, European Union leaders called on Greece to "urgently" enact deficit-cutting measures and vowed to do what is needed to meet the country's financing needs in July.
In a statement issued after a summit in Brussels, EU leaders welcomed Greece's "strong commitment" to containing debt and deficit.
They also endorsed the voluntary participation of investors in a rescue plan for Greece, which is seeking to avert a default on its debt next month by securing the release of a €12 billion EU-IMF bailout loan.
Greek prime minister George Papandreou is under huge international pressure to secure parliamentary support this week for €28 billion in cutbacks and tax increases and a €50 billion privatisation plan required to control the country's debt crisis.
Speaking after the summit, Mr Papandreou said he had received the support of the country's European Union partners. "This is not only a green light but also a positive sign for the future of Greece," he said.
Reuters