Belfast Telegraph

Officials deny ECB bailout threat

European officials have denied Ireland is being threatened to repay all the global money men owed billions by the country's bailed-out banks.

With the first review of the 85 billion euro bailout loan deal complete, finance chiefs rejected claims that the Government is being held to ransom over the massive debts.

Klaus Masuh, a European Central Bank (ECB) official inspecting the exchequer books, denied Ireland is being forced into a crippling payback by German and French lending houses. "There is no threat from the European Central Bank," he said.

A delegation from the International Monetary Fund (IMF), ECB and European Commission (EC) has spent the last ten days trawling government finances, sizing up a jobs initiative and public sector spending review, and meeting business and trade union leaders.

Their report reads like a pat on the back for a potential 70 billion euro bailout and radical reform of banks, swingeing pay cuts, tax hikes and government savings.

Headed by IMF deputy director in Europe Ajai Chopra, the mission said the Government has moved very quickly and was on track to meet commitments under the IMF-European Union (EU) deal. "This programme is a lifeline for Ireland. It represents an Irish solution to an Irish problem and it enjoys our support," Mr Chopra said.

"There's no doubt that there are very important changes ahead but we see implementation of this programme as being the key way forward."

The only significant changes to the deal restores the minimum wage to 8.65 euro (£7.66) - one of the highest rates in Europe. An employers' levy, pay-related social insurance (PRSI), will be halved for minimum-wage workers to ease pressure on business costs.

On the property market, the National Assets Management Agency (Nama) "bad bank" will not open a phase two to transfer loans worth less than 20 million euro (£17 million) from banks to its books. It will be formally agreed on May 16.

Mr Masuh, the ECB's co-ordinator of country missions, rejected claims the IMF-EU deal was only on the condition that bondholders - the top financiers owed billions by Irish banks - can recoup their lending. He said: "In our view, burden-sharing on the senior bondholders would have been risky for Ireland and would have undermined confidence in the banking sector."

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