EU approves financial assistance package for Ireland

Ecofin minister meeting on a conference call on 21 November, approved the request of the Irish Government for financial assistance from the International Monetary Fund (IMF), the European Union and euro-area Member States. The European Union and euro-area financial support will be provided under a strong policy programme which will be negotiated with the Irish authorities by the Commission and the IMF, in liaison with the European Central Bank (ECB).

In the context of a joint programme of the European Union and the International Monetary Fund (IMF), the financial assistance package agreed by Ecofin ministers to the Irish state should be financed from the European financial stabilisation mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU Member States. The United Kingdom and Sweden have already indicated today that they stand ready to consider a bilateral loan.

The programme will run for three years and address the fiscal challenges of the Irish economy in a decisive manner. It will build on the fiscal adjustment and structural reforms that will be put forward by the Irish authorities in their Four Year Budgetary Strategy next week. This strategy will provide the details of the Government's commitment to achieve fiscal consolidation of 6 billion Euro in 2011 as part of a strategy leading to a 3% of GDP deficit by 2014, implying an overall consolidation of 15 billion in the 4 year strategy, which contains an annual review.

Given the strong fundamentals of the Irish economy, decisive implementation of the programme should allow a return to a robust and sustainable growth, safeguarding the economic and social cohesion. The programme will also include a fund for potential future capital needs of the banking sector.

By building on the measures already taken by Ireland to address stress in its banking sector, a comprehensive range of measures, including deleveraging and restructuring of the banking sector, will contribute to ensuring that the banking system performs its role in the functioning of the economy.