IRELAND moved to reassure Europe last night that the debt-ridden country is not in crisis and no multi-billion pound bail-out is necessary.
Prime Minister Brian Cowan used a statement in the Dail to insist the debts were “fully-funded” until mid-2011 and that domestic measures to stabilise public finances were working.
At the same time his finance minister Brian Lenihan arrived for talks with his 15 eurozone counterparts in Brussels to assess the impact on the single currency, now under severe pressure in the markets.
Mr Lenihan told waiting reporters: “Market developments have not been good to Ireland (but) Ireland is fully funded until the middle of next year.”
He was expected to fend off mounting pressure on Ireland to accept the need for a massive bail-out, either from the European Union or the International Monetary Fund or a mixture of the two.
Germany was leading efforts to convince Mr Lenihan that market stability and the long-term security of the euro could only be guaranteed by swift, decisive action to prop up Ireland.
But there were no signs that Dublin is – yet – prepared to offer up its economic sovereignty in the hope that volatile markets will ease pressure on the currency.
Mr Cowan told Irish MPs: “We are living in a very fragile time and we need to be careful about what we say so that we don’t add to the turbulence.
“Those that are now commenting on Ireland’s financial situation should also remember that the Exchequer is fully funded into the first half of 2011, so the impending sense of crisis that some wish to suggest the Irish State faces is not a fair reflection of the facts.”
But he conceded: “Clearly there is a need to bring stability to markets, here and elsewhere, as the current costs of borrowing are very high and are at a level that would make it difficult for banks here to operate as engines of recovery.”
On Ireland’s massive deficit – at 32% of GDP, the highest in Europe and way above the maximum 3% allowed under single currency rules – Mr Cowan said: “While substantial progress has been made in tackling and stabilising the deficit, this Government is acutely aware that further measures will be required to restore sustainability to the public finances. That is vital to underpin future economic growth.”
He insisted the Government remains committed to getting the deficit below 3% by the end of 2014.
Mr Cowan said significant steps had been taken since 2008 in response to the rapid deterioration in public finances “to stabilise the situation and begin the process of returning this country to a sustainable fiscal position”.
He described the Government’s four-year budgetary plan, to be published shortly, as “clear and workable” – something which would “map out a way forward to national recovery”, boosting jobs and growth.
He said the European Central Bank continues to meet the liquidity requirements of the Irish banking system, and emphasised that the Government’s priority is to safeguard deposits – a concern shared by governments across Europe.
