IMF deal on table if no bank debt agreement, sources say

The Irish Times - Saturday, January 26, 2013IMF deal on table if no bank debt agreement, sources say



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DEREK SCALLY in Davos and TOM HENNIGAN in Santiago
Details
of the Government’s strategy to win a bank debt deal and exit the
bailout emerged yesterday in Davos. Government sources said Ireland is
prepared to accept a new, conditional IMF programme if bank debt talks
do not deliver optimal conditions for returning to markets.
Officially
Irish representatives at the World Economic Forum declined to discuss
details of a possible successor IMF programme other than to say “all
options are on the table”, upping the ante for a debt deal.
But a
Government source said: “As we move to the end of the programme we are
looking at all the various options available to us. It’s much too early
to say which options will be required but we are not ruling any out.”
Germany
appeared to be caught unawares by the Government’s discussions with the
IMF, and officials in Berlin declined to comment yesterday.
If
Ireland were to enter a conditional programme with the IMF, it would
have the effect of depriving the European Union of a much-needed
economic success story.
Irish officials said whether Ireland
availed of the IMF offer would depend on many factors, including the
outcome of ongoing negotiations on Ireland’s banking debt.
Strategy
However,
if the Government’s strategy is perceived by European partners as an
overt attempt to exert pressure to expedite agreement on debt
concessions, it could backfire.
Officials familiar with the talks
said any new line of credit from the IMF – if agreed – could take the
form of an active or precautionary arrangement.
Such exit arrangements are common, though not obligatory, for programme countries; nor are such backstops always activated.
“How these negotiations work out will have an impact on how we are perceived by markets,” said the Government source.
One
source familiar with troika talks said the prospect of additional IMF
assistance could be a double-edged sword for the Government. Successor
programmes, as with all IMF credit, are always conditional. The strings
attached could be entirely new or could draw on politically unpalatable
conditions from the old programme.
Taoiseach Enda Kenny left Davos
yesterday confident that business and political leaders had heeded his
warning that Ireland’s recovery was fragile and dependent on the coming
months.
Tánaiste in Chile
Meanwhile,
Tánaiste Eamon Gilmore has taken Ireland’s campaign for a renegotiation
of its bank debt to South America, arguing for an “appropriate agreement
with the European Central Bank” at a gathering of EU and Latin American
leaders in Chile.
Mr Gilmore said such a deal was necessary to
bring about a “post-crisis Ireland”. His comments form part of the
latest diplomatic offensive by the Government to convince its EU
partners to renegotiate the country’s bank debt.
Over the weekend,
at the first gathering of EU leaders during the Irish presidency of the
bloc, the Tánaiste will meet with German Chancellor Angela Merkel and
hold bilateral talks with the prime ministers of France and Finland as
well as Chilean president Sebastian Piñera.


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