Ireland’s financial chiefs are set to lock horns with the International Monetary Fund (IMF) and European officials on bail-out options to save the banks and drag the country from economic meltdown.
The Government will open its debt-ridden books to an influential team of experts while the harrowing spectre of a potential multi-billion rescue looms over Dublin.
Despite the daunting arrival of IMF specialists on Wednesday, the Irish Government – reluctant to accept the need for outside assistance – maintained that it has not asked for or been granted financial aid. Taoiseach Brian Cowen said talk of a bail-out was belittling Ireland.
The detailed talks will centre on two fronts – plans for 15 billion euro (£12.7 billion) savings over four years and next month’s six billion euro (£5.1 billion) slash-and-burn budget as well as the shuddering damage done by the banking black hole.
It has been estimated that the banks need 50 billion euro (£42.4 billion) to survive but the losses are compounded every month by worsening bankruptcies, mortgage arrears, a run on deposits and loan defaults. In some quarters the bail-out numbers being speculated are as high as 90 billion euro (£76.4 billion).
It is understood an IMF team laid the groundwork on Wednesday in the offices of the Central Bank for a trawl of Irish state banking records.
Britain has already stepped up to the plate with Chancellor George Osborne stating that Treasury chiefs were considering all options for financial aid to Ireland.
The Dublin talks follow two days of discussions in Brussels involving eurozone and EU finance ministers and heated debate across Europe over a way forward for Ireland.
Those sitting down include IMF experts, the European Central Bank and European Commission officials. Putting the Irish case will be Department of Finance officials, financial regulator Matthew Elderfield and the Central Bank. Irish Government sources suggested the talks would last several days.
Insiders in Brussels believe most EU Governments expect Ireland to take advantage of a bail-out – but more than likely not before the Government unveils a four-year economic recovery programme, due next week. There are also concerns of so-called contagion across Europe with troubled states like Portugal, Italy and Spain facing their own economic woes which experts fear could deepen if borrowing costs are not reined in.