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Ireland committed itself Wednesday to working with an EU-IMF mission on urgent steps to help its stricken banking sector, a process that could lead to a bailout despite Dublin's deep reluctance. A team from the European Commission, the International Monetary Fund (IMF) and European Central Bank will travel to Ireland today to examine what measures may be needed should Dublin decide to seek aid, eurozone finance ministers said. Irish Prime Minister Brian Cowen said that the mission would look at what assistance Ireland might need, again rejecting suggestions his government was discussing a bailout. "What we want to concentrate on now is in a focused way, over coming days, to sit down and see in what way assistance can be provided to ensure that these issues can be dealt with properly and appropriately," he told Parliament. "There has been no question of the government ... (being) in a negotiation for a bailout," he said, dismissing the term "bailout" as pejorative. Ireland has said the bill for bailing out its banks could top 50 billion euros ($67.61 billion), but investors fear the final figure could be even higher given rising residential mortgage arrears, deposit outflows and higher funding costs. Citing EU sources, Reuters said Ireland may need assistance of between 45 billion and 90 billion euros ($121.33 billion), depending on whether it needs help only for its banks or for public debt as well. While Ireland made no request for an immediate EU rescue, resisting pressure to follow in Greece's steps, economists said a state bailout remained a probability even though its public borrowing needs are funded until mid-2011. "There is an air of inevitability that there will be some sort of bailout," said Alan McQuaid, chief economist at Bloxham Stockbrokers. "Why come to Dublin if you are not going to give a bailout?" Meanwhile, underlining the fear that Ireland's problems could spread, Portugal's borrowing costs soared at a treasury bill auction, with yields for 12-month paper jumping more than 150 basis points from a tender earlier this month. Reuters |
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