THE GOVERNMENT has met the terms of the EU-IMF bailout agreement but Ireland’s problems required a wider European solution, the senior IMF official overseeing the bailout has warned.
IMF deputy director Ajai Chopra said the Government’s attempts to get the economy back on track should be judged on its merits and not as part of the euro zone debt crisis.
Following its third review of the bailout, the troika of the IMF, European Commission and European Central Bank said Ireland was “on track” to meet its targets.
Ireland’s borrowing costs would be lower and the country would have a good chance of returning to the bond markets if it weren’t for the crisis spreading from Greece.
“The problems that Ireland faces are not just an Irish problem,” said Mr Chopra. “They’re a shared European problem. What we need and what’s lacking so far is a European solution to a European problem.”
Amid deadlock over the terms of private-sector involvement in a second Greek bailout, German chancellor Angela Merkel is battling to avoid being jumped into a deal.
There is mounting concern in Europe, however, about the potential for the turmoil in the euro zone to spiral out of control.
Minister for Finance Michael Noonan said there had been a shift in attitude at EU-level that the problem was a Europe-wide debt problem rather than a crisis affecting smaller countries only. This was “a big game changer”, he said.
But the Government remains on a collision course with the ECB over plans to force losses on some senior bondholders in Anglo Irish Bank and Irish Nationwide.
Mr Noonan said there was “unfinished business” on this issue, which he intended tackling in the autumn.
ECB mission chief Klaus Masuch said the bank was still opposed to so-called burden sharing with these bondholders.
The ECB also ruled out restructuring of Irish debt.
However, the commission said talks on further solutions to ease the pressure of the Greek debt crisis could benefit Ireland.
Istvan Szekely, a commission director, said Ireland was “best positioned” to benefit from measures introduced for Greece. These measures were agreed in principle last Monday night when euro zone finance ministers met in Brussels.
At the same meeting, the ministers dropped their commitment to avoid a “selective default” on Greek debt following the involvement of private investors. However, diplomats said confusion still surrounds the outcome of that discussion with ministers at odds over what they actually agreed.
Italian finance minister Giulio Tremonti called for more resolute action from Europe, saying even the wealthiest countries would not be spared dire consequences if there was no solution.
“No one should have any illusions of individual salvation. Just like on the Titanic, not even the first-class passengers will be saved.”
