Europe OKs $112.53 billion Ireland bailoutSubmitted by GCG3 on Sun, 11/28/2010 - 20:15
NEW YORK (MarketWatch) — European financial leaders on Sunday approved an 85-billion-euro, or $112.53 billion, aid package for debt-crisis-stricken Ireland.
The agreement was announced at an European Union finance ministers’ meeting in Brussels.
The financial package includes 10 billion euros for immediate recapitalization measures, 25 billion euros on a contingency basis for banking system supports and 50 billion euros covering budget-financing needs, according to a statement from the euro-zone finance ministers.
“This program is absolutely essential for the country,” said Irish Prime Minister Brian Cowen at a press conference in Dublin. “We have carefully considered all available policy options. (It’s) the best available deal for Ireland.”
Cowen added that the bailout doesn’t involve any change in Ireland’s ultra-low corporate tax rate and that repayments will be at a 5.8% interest rate. The funding will be available to Ireland at a cheaper interest rate than what is available on the international markets, Cowen added.
“It is a forceful response to vulnerabilities in the banking system imposing a heavy cost on the budget and, in turn, hurting the prospects for growth that Ireland needs for an enduring solution to the crisis,” Olli Rehn, European Union Commissioner, and Dominique Strauss-Kahn, managing director of the International Monetary Fund, said in a joint statement. “Swift and sustained implementation of this program will create a smaller banking sector that is robust and well capitalized, and able to serve the needs of Ireland’s economy.”