Brussels, 07/12/2010 (Agence Europe) - As expected, on Tuesday 7 December the Council of finance ministers from the 27 EU member states endorsed the decision to give Ireland financial aid worth €85 billion. This makes Ireland the second eurozone country (after Greece, which has been promised loans of €110bn over three years) to receive aid of this type. The Council also endorsed a recommendation setting out the conditions for the Irish aid package. Ireland will have to correct its excessive public deficit by 2015.
As agreed on 28 November (see EUROPE 10266), the ECOFIN Council agreed on an €85bn aid package for Ireland, in response to a request from the Irish government on 22 November. The aid includes €10bn to be used immediately to recapitalise Irish banks with a €25bn contingency reserve and €50bn to cover the financing needs of the Irish government's budget for two years.
Half of the banking support measures (€17.5bn) will be financed by an Irish contribution through its treasury cash buffer and investments in Ireland's National Pension Reserve Fund. The remainder of the total package shall be financed by (€22.5bn each): 1) The European Financial Stabilisation Mechanism (EFSM); 2) the European Financial Stability Facility (EFSF) (€17.7bn from the EFSF) and loans from the United Kingdom (€3.8bn), Denmark (€400 million) and Sweden (€600m); and 3) the International Monetary Fund (IMF).
The loans will be granted as part of a package negotiated with the Irish government by the Commission and the IMF, in liaison with the European Central Bank. The aid package includes restructuring of the Irish banking system and reforms to encourage growth and bring the country's public deficit back below the 3% of GDP limit by 2015 (rather than by 2014 as previously set out).
This formal endorsement of the aid package comes as Ireland begins examination of its budget for 2011, which includes unpopular austerity measures required (implicitly at least) by the European Union and the IMF in return for the aid package. (L.C./transl.fl)