The chief economist of one of the world's biggest banks has recommended that Ireland negotiate a stand-by second IMF/EU bailout.

The remarks by Willem Buiter of Citigroup come as the Government prepares for the arrival of the Troika tomorrow for its fifth review of the loan programme.

Currently Ireland would borrow at 8% if it returned to the markets, but it is borrowing from the Troika at about 3%.

Mr Buiter said: "Borrowing at 8% when you can borrow at 3% doesn't sound like good business."

He added that Ireland should not attempt to secure a second bailout "in a state of near panic at the last minute".

Instead, the Government should negotiate second loan agreement in advance and have it on stand-by in case it cannot borrow from the markets this year.

Mr Buiter has said that Ireland needs to renegotiate the debt associated with the recapitalisation of IBRC, formerly Anglo Irish Bank.

He said that Greece would apply a haircut to bondholders this year and Portugal next year.

The economist said that Ireland need to renegotiate its debt but this should focus on the interest rate applying to fixing IBRC.

Ireland received an €85bn bailout from the troika of the EU, ECB and IMF in November 2010.

Taoiseach Enda Kenny has said he is confident of a positive outcome from the latest review of the implementation of financial reforms following an the bailout.

"The troika arrive tomorrow for their fifth analysis. I expect that Ireland will again measure up," Mr Kenny said.

In October, after the last review, the troika welcomed Ireland's adoption of reforms and said the implementation of the programme "continues to be strong".

Mr Kenny said it was in Ireland's interest that Europe was able to deal with the euro and debt crises "politically".

"It is in Ireland's interest that every other economy grows because we are an exporting nation," Kenny said.

EC in successful bond auction

The European Commission has said it has completed a successful bond auction to raise €3bn that will go towards the bailout programs of Ireland and Portugal.

The bonds sold have a maturity of 30 years, the first such bonds to be sold at auction, and part of the deal to reduce costs for bailout countries as agreed at a summit of EU leaders last July.

The €3bn bond matures on 4 April 2042 and pays an interest coupon of 3.75%.

The Commission said in a statement that the sale was completed within two hours and was oversubscribed by €2.2bn.