€10 billion credit line safety net sought

The Department of Finance has confirmed that it is seeking a €10 billion credit line from the EU and IMF to assist Ireland’s exit from the bailout at the end of this year.

Finance Minister Michael Noonan’s plan is that the money would never have to be drawn down, but would act as a comfort to the financial markets. Yesterday the head of euro zone finance ministers, Jeroen Dijsselbloem, told the European Parliament that Ireland would get “measures to support its gradual exit” from the bailout.

He says such a measure was needed “to make sure that it is a good exit and not a temporary exit.” European Commission spokesman Oliver Bailly confirmed that such measures were being examined by euro zone finance ministers. But he added that “no preference” for the type of support had been agreed.

The Department of Finance said the details of the E10 billion credit line would be thrashed out after the budget with officials from the European Union, European Central Bank and International Monetary Fund. It is understood Mr Noonan wants the E10 billion cover in case any international crisis drives up Ireland’s borrowing costs when it returns to the markets. ”If we had a credit line equivalent to a full year’s deficit, in other words around E10 billion, then if something happens … we have a year’s funding of the deficit to allow the thing work through,” Minister Noonan said in an interview in the Irish Independent.

”That’s how the precautionary programme would run. But my hope would be that it would just be there as a backstop to give confidence to our lenders. That we’d actually never have to use the precautionary credit line,” according to RTE News.