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Ireland

IMF and EU officials seek to ease Ireland's bailout jitters

Reuters/Cathal McNaughton

International delegates were headed to Ireland Thursday morning for crisis talks with the government over how to fix the country’s debt-ridden banking system. Ireland has not committed to accepting aid because of fears the attached conditions will affect domestic issues, such as its low corporate tax rate.

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Representatives from the International Monetary Fund, the European Central Bank and the European Union will take part in consultations as markets await news of a bailout.

But Irish Prime Minister Brian Cowen said he would take no decision on possible aid until after Thursday's talks.

"We have still not applied for a facility. We haven't started any negotiations," he said in a live interview on RTE state television late Wednesday.

"It is urgent. We accept it is urgent and we need to deal with it but we will deal with it in our own interests as well."

Belgium, which holds the European Union presidency, says Ireland will eventually be forced to comply.

"We have the answer, and we are just waiting for the question," said Belgian Finance Minister Didier Reynders.

There was widespread dismay in Ireland at the prospect that any aid might come at the cost of surrendering key policies.

Austria raised the sensitive question of whether Ireland should be required to increase its low corporate tax, which at 12.5 percent, has long been seen by competitors as an unfair investment incentive.

Ireland has extensively bailed out its banking sector, which has pushed the public deficit
to some 32 per cent of output this year. This is more than 10 times the EU limit.

Greece had to accept stringent conditions in return for the 110-billion-euro bailout agreed in May.

 

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