IMF-EU officials investigate Ireland’s books

| November 19, 2010 | 0 Comments
IMF-EU officials investigate Ireland’s books

As Ireland looks set to accept a multi-billion euro loan, the International Monetary Fund (IMF) and EU officials have commenced their investigation of Ireland’s bank books.

Yesterday, Governor of the Irish central bank, Patrick Honohan, said the country is expected to accept a “very substantial loan”.

The news comes as speculation has been mounting all week as to whether Ireland would accept emergency funding – something which its Government continues to deny, insisting it is fully funded until at least the middle of next year.

However, the IMF and EU look set to conclude their investigation by the weekend and a bailout package is set to be announced early next week.

However, British Prime Minister David Cameron has warned that a bailout for Ireland could inflate Britain’s spiralling budget deficit with the UK having to borrow even more this year if the Government decides to lend directly to Ireland.

Britain would have to foot a bill of around £7 billion of a £51 billion bailout fund after the PM and Chancellor George Osborne have both said they are ready to support Ireland.

Ireland, once known as the “Celtic Tiger” economy, experienced a property boom in the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the euro zone.

However, the country’s banking system came close to meltdown after the slump in the country’s property market resulted in a fall in the value of investments linked to it.

Four of the country’s banks have now been nationalised, while property prices have fallen by more than 50%, in some cases.

It suffered one of the deepest recessions of its fellow euro zone nations and is also battling to bring its deficit down from 12% of economic output to 3% by 2014.

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