Bloomberg News

Noonan Says Irish Want to Pay Debts, Not Follow Greece

October 20, 2011

(Updates with budget deficit target in third paragraph, bonds in eighth.)

Oct. 20 (Bloomberg) -- Ireland’s government wants to repay its debts, to avoid the “appalling” scenario unfolding in Greece, Finance Minister Michael Noonan said today.

A solution for one member state of the euro region isn’t necessarily appropriate for another, Noonan told reporters in Dublin, as the country’s bailout partners lauded the government for its “strong” implementation of its program. While European authorities discuss how to include a write down of as much as 50 percent of Greek bonds, Noonan said that Ireland doesn’t want to go “down the route” of Greece.

Ireland will beat its target of reducing its budget deficit to about 10.5 percent of gross domestic product this year, and plans to unveil additional austerity measures of more than 3.6 billion euros ($4.9 billion) for next year, Noonan said. Greek Prime Minister George Papandreou’s government is facing protests by an estimated 50,000 people gathered in Athens for a second day as its bailout partners force it to make steeper cuts.

Tear gas was fired in central Athens as protesters clashed with police for a second day outside the parliament building where lawmakers debated the austerity bill, the second in four months.

Ireland aims to be the first of three bailed-out euro-area countries to exit their rescue program, Irish Prime Minister Enda Kenny said earlier this month. Even with a slowing in growth at its trade partners, Ireland’s economy is forecast to grow by 1 percent this year and next, the International Monetary Fund, EU and European Central Bank said today.

Woods

“Ireland is not of the woods yet,” said Istvan Szekely, a European Commission official overseeing the bailout in Dublin today. “It’s made a lot of progress, but there’s a long way to go.”

Szekely said that he would look at any decisions from this weekend’s summit of European leaders to see how they can be used to improve Ireland’s situation. Ireland may try to transfer part of the 62 billion-euro cost of bailing out its banks to the euro-region’s rescue fund should policy makers allow the facility to buy stakes directly in lenders, three people with knowledge of the matter said.

Ireland’s two-year borrowing cost, which reached a record 23.5 percent in July, dropped 26 basis points, or 0.26 percentage point, today to 8.26 percent. The yield on two-year Greek bonds climbed 23 basis points to 76.86 percent.

Ireland was the second euro country to receive a rescue, being pledged 67.5 billion euros in November, after Greece’s April 2010 package.

--Editors: Dara Doyle, Simone Meier

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net; Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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