The Government today agreed to request financial support from the European Union and the Euro Area Members States. The IMF will also be requested to assist in the provision of support.
The Government welcomes the agreement reached at the Eurogroup meeting today that providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the Euro Area.
In the context of a joint programme EU/IMF, the financial assistance package 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.
EU 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 ECB.
The programme will address the budgetary challenges of the Irish economy in a decisive manner on the basis of the ambitious budgetary adjustment and comprehensive structural reforms that will be contained in the Government's Four Year Budgetary Strategy. Given the underlying strengths of the Irish economy, decisive implementation of the programme should allow a return to a robust and sustainable growth, safeguarding the economic and social position of the people of Ireland.
A central element of the programme will also be to support further deep restructuring and the restoration of the long-term viability and financial health of the Irish banking system. It will build on the extensive measures taken by Ireland to strengthen its banking sector, via guarantees, recapitalisation and asset segregation. These measures have helped to maintain financial stability of the Irish banking sector at a time the both the banking system and the Irish economy have confronted significant challenges reflecting both domestic and international factors.
The programme will address the 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.
Since the last Eurogroup meeting on the 16th November there has been very constructive and positive engagement and dialogue between the Irish authorities and the Commission, the ECB and the IMF in order to determine the best way to provide necessary support to address continuing market risks, especially as regard the banking system, in the context of the four-year budgetary plan and the upcoming budget.