Sunday, November 28, 2010

Ireland Bailout

The government statement on this is available on this link

Judging by the initial reaction to the release of the Wikileaks documents relating to US diplomacy and the fact that the world's media seems already to have gone home, it is likely that Ireland will not be in the limelight as much in the next few weeks. The agreement is very close to what has been discussed in the media in the last few days - a 50 billion fund that will fund borrowing on the fiscal side, 10 billion as a capital fund for the banks and 25 billion further for capital contingencies. We are kicking in about 12.5 billion from the pension fund. We have been given until 2015 to make the full fiscal adjustment down to three per cent. There is no proposal to share losses with senior bank bondholders though it is not clear what is implied for junior bank bondholders. If there are no further bank problems then debt will top off somewhere around 110 per cent and then start to decline. But if we have to eat into the contingency fund, the more unlikely this scenario will become. Also, it is so far unclear what is meant by a 5.8 per cent interest rate and I look forward to reading more detailed analysis of what this actually means.

Now switch to www.irisheconomy.ie for further enlightenment.

Added Material:

Paul Krugman asks "what is the Gaelic for you gotta be kidding me".

John McHale comment on the "dissappointing" rate of interest. Particularly disappointing that the EU is charging a lot more than the IMF.

5 comments:

Kevin Denny said...

"Enlightment", very droll...

Liam Delaney said...

I think there will be some good posts over the week and there is a lot about this programme that needs to be discussed including the interest rate, the nature of the post-agreement banking facility and so on.

Kevin Denny said...

How about "bail-out mar dhea"?

Martin Ryan said...

Perhaps Krugman didn't know that it had been NTMA policy for the last while to wait until February (or thereabouts) before borrowing again? That might explain his lack of consideration for what rate we might have been forced to take should we have been borrowing in the sovereign debt market in February.

Heather said...

Krugman DID know about not borrowing again, he just doesn't care about the rate, why should he? Others will take care of it.