November 29, 2010

EU agrees to Irish bailout

 

 The EU has agreed to help Ireland fight its debt crisis with an €85 billion rescue package. Other non-eurozone countries are included in the bailout.

 

Irish Prime Minister Brian Cowen is optimistic about the bailout. He thinks that the final agreed program is the best available deal for Ireland, allowing them “to move forward with secure funding for our essential public services, for our welfare state, for the most vulnerable members of society that depend on them.”

 

He also added that the bailout provides enough time and space to take care of the problems that they have been having before the crisis began.

 

The European Commission, the European Central Bank, and the International Monetary Fund agreed on an €85 billion rescue package consisting of loans to help Ireland cover its huge budget deficit and bank debts. The bailout will also include bilateral loans from Britain, Sweden, and Denmark.

 

Nevertheless, investors fear that Portugal and Spain will follow Ireland.

 

EU Monetary Affairs Commissioner Olli Rehn said that private bondholders might have to share in the future the burden of debt restructuring, although it will be decided after studying each specific case.

 

The Irish bailout gives way to a four-year austerity plan which includes €10 billion in spending cuts, €5 billion in tax increases, and cutting about 25,000 public sector jobs.

 

Subject to market conditions, Ireland is expected to pay an average interest rate of 5.8% per year on the loans.

 

Protestors in Ireland have shown their discontent on the bailout and the austerity plan. Some of them held signs of Cowen labeled as a traitor.

 

Cowen seems to be pushed more and more to quit, having also his party (Fianna Fail) lost a by-election last week, shrinking their coalition’s parliamentary majority to only two seats.

 

EUD Staff

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