German minister says final amount yet to be decided
Following the Government’s capitulation to the financial crisis, two sources briefed on the talks said a sum of between €80 billion and €90 billion was under discussion.
As a frantic round of talks continued last night, German finance minister Wolfgang Schäuble said the final amount remains to be decided.
Mr Schäuble also tried to play down fears that the EU authorities were increasingly concerned about wider contagion in the euro zone.
Ireland’s looming bailout, only the euro zone’s second, comes six months after the European authorities agreed to provide €110 billion in emergency loans to Greece.
Preliminary approval for the aid follows a teleconference last evening of a euro group meeting of finance ministers and a teleconference of all EU finance ministers.
The deal includes a fund for the potential future capital needs of the banking sector and for the public finances. The precise terms remain to be agreed, with attention immediately centred last night on the corporation tax rate.
Germany, France and other countries are likely to press for change, a well-placed diplomat said.
However, a European Commission official said there was a sense after the talks that an increase in the rate might not be immediately sought.
The meeting started at 5pm Dublin time, some four hours after Minister for Finance Brian Lenihan declared on RTÉ radio that the Government would be seeking external aid.
In a joint statement last night, the ministers said they welcomed the request of the Irish Government for financial assistance from the European Union and euro area member states.
“Ministers concur with the European Commission and the European Central Bank that providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the euro area.”
The statement, issued almost simultaneously with the Government’s own statement, also pointed to the likelihood of bilateral loans from Britain and Sweden.
The decision to grant the request marks the culmination of an extensive effort by the European and IMF authorities to avoid a repeat of the disruption and month-long delays that characterised the Greek debacle.
That affair was swiftly followed by the creation of €750 billion in funding lines that the Government now hopes to make use of.
The aid will come from the European Financial Stability Facility, the Luxembourg-based €440 billion loan guarantee scheme which was set up during the summer. A €60 billion scheme operated by the European Commission will also be tapped.
The approval of aid from the IMF aid will be made under a separate procedure.
The Ministers’ statement said recovery programme to be agreed with the European Commission will address the fiscal challenges of the Irish economy “in a decisive manner”.
The Government’s reliance on the 12.5 per cent rate is core to the four-year plan and the 2011 budget. However, only the consolidation targets of €15 billion and €6 billion stand approved at this point.
The Slovak finance minister Ivan Miklos said last night that his own government has raised “concerns” about the aid mechanism to be deployed.