Irish Follow-Up Program to Hinge on Terms, Estonia’s Ligi SaysOtt Ummelas
Estonian Finance Minister Juergen Ligi said the possibility of follow-up financing for Ireland after it exits a bailout this year would depend on aid conditions.
A precautionary credit line “has been talked about,” even as Ireland has a funding cushion of about 15 months, Ligi, who took part in this week’s euro-area finance ministers’ meeting in Luxembourg, told reporters today in the Estonian capital, Tallinn. Even so, follow-up financing for either Ireland or Spain, which is also due to exit an aid program for its banks this year, wasn’t discussed at the latest meeting, he said.
“There is always the option, depending on the success of returning to market, to consider different measures to support countries, for example to keep a spare credit line in the case of Ireland,” Ligi said. “Everything depends on the conditions attached, and what it would be needed for.”
The Irish government hasn’t decided finally on whether to seek a precautionary credit line from international authorities after exiting the bailout, Finance Minister Michael Noonan said yesterday. The country’s debt agency has almost 25 billion euros in cash, meaning Ireland already has “a credible backstop” in place, he said.
Spain took 41.3 billion euros ($55.9 billion) in European aid to shore up its banking system as concern mounted last year that losses building up at former savings banks such as the Bankia SA group would harm government finances.
The Spanish banking program has “generally been implemented and there’s also been progress with divesting bad assets,” Ligi said. “Spain has had a rather Nordic stance in managing this crisis, according to my experience. They do have plenty of problems, but they have done a lot on restructuring their financial sector.”
During talks yesterday in Luxembourg, a rift emerged between proponents of enhanced backstops to cover any capital shortfalls that may be uncovered by the ECB-led bank assessments, including Germany, and those who maintain that existing options will suffice. A solution to this would depend on the result of continuing coalition talks in Germany, according to Ligi.
“They are still putting together the government -- it is clear they can’t present rigid positions,” he said. “It is a subject of their coalition talks.”