Nov 22, 2010
Ireland will seek emergency international aid totaling as much as 60 percent of the size of its economy, dwarfing the Greek bailout, to save its banks and bolster its finances.
Ireland will ask for about 95 billion euros ($130 billion) from the European Union and International Monetary Fund, Goldman Sachs Group Inc. estimates. UniCredit SA put the package at as much as 85 billion euros, while Deutsche Bank AG sees a 90 billion-euro plan. The 110 billion-euro aid for Greece in May was the equivalent of 47 percent of its gross domestic product.
The cost of bailing out Ireland will be inflated by the price of shoring up its banking system, which Goldman puts at almost a third of the total request. The bursting of the real- estate bubble in 2008 pushed its banks close to collapse and plunged the country into recession.
“Good news in the short run does not mean problem solved,” Ken Wattret, chief euro-area economist at BNP Paribas in London, wrote in a note to investors today. “As we saw with Greece, securing financial support does not eradicate the underlying problem: the need for multi-year fiscal austerity to win back the markets confidence over the outlook for the public finances. That is going to be tough.”
This article was posted: Monday, November 22, 2010 at 11:06 am