August 9, 2013 / 3:38 PM / 6 years ago

Ireland eying backstop credit line focused on banks -government source

DUBLIN, Aug 9 (Reuters) - Ireland aims to secure a precautionary credit line later this year to smooth its exit from an international bailout, and wants any conditions focused solely on its still-troubled banks, a government source said on Friday.

Rescued by Europe and the International Monetary Fund in late 2010, Ireland is on course to become the first euro zone country to wean itself off emergency assistance.

Talks with its “troika” of lenders - the IMF, European Commission and European Central Bank - have now turned to what kind of safety net would help ease the country’s transition back to funding itself in international bond markets.

The IMF believes Ireland should play it safe and apply for a credit line which would be drawn on only if needed, and the government is now of the same mind, the source said.

“The expectation is that something will be agreed by the end of October, early November that would commence from the start of December,” the source, who has knowledge of the talks on how Ireland should exit its bailout, told Reuters on Friday.

Ireland’s lenders are due to return to Dublin for one last quarterly appraisal of the bailout in October, when final details of the post-progamme funding will also be hammered out.

But with Ireland’s quarterly bailout targets coming to an end in December, the government wants any new goals to apply only to its banks and a fresh agreement that would not specify what fiscal measures Dublin should adopt, the source said.

In the bailout agreement, the government had to spell out how it proposed to hike taxes and cut expenditure during the three years of assistance, part of an austerity drive that is set to continue until 2015.

Finance Minister Michael Noonan said last month that his preference would be to secure some type of credit line but that talks on an exit strategy between the government and its lenders would not be concluded until later this year.

A precautionary credit line focused on the banks, whose collapse when a property bubble burst precipitated the country’s economic crisis, could see Dublin adopting a programme similar to the one Spain signed its debt-stricken banks up to in 2012.

Ireland’s mostly nationalised banks, rescuing which cost the state 64 billion euros, equivalent to 40 percent of annual economic output, face their first stress tests in three years next year to gauge their resilience to economic shocks.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below