The chief economist of one of the world's biggest banks has recommended that Ireland negotiate a stand-by second IMF/EU bail-out.
The remarks by Willem Buiter of Citigroup come as the Government prepares for the arrival of the troika - the EU, ECB and IMF - tomorrow for its fifth review of the loan programme.
At present Ireland would borrow at 8% if it returned to the bond markets, but it is borrowing from the troika at about 3%.
"Borrowing at 8% when you can borrow at 3% doesn't sound like good business," said Mr Buiter.
He added that Ireland should not attempt to secure a second bail-out "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 re-negotiate 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. He said that Ireland needed to re-negotiate its debt but this should focus on the interest rate linked to fixing IBRC.
