The International Monetary Fund (IMF) mission is beginning its inspection of Ireland’s debt-ridden finances.
Up to 12 officials, including banking experts and auditors, headed by Ajai Chopra, will join representatives from the European Central Bank and European Commission in poring over the state’s books.
The audit begins amid speculation from Ireland’s Central Bank governor Patrick Honohan that the state needs a bailout loan running to tens of billions.
Talks will focus on the planned six billion euro (£5.1 billion) budget savings due on December 7, a four-year 15 billion euro (£12.8 billion) savings plan and the financial black hole crippling the banks.
The IMF was keen on Thursday to stress that it has a social agenda amid fears the poorest in society would bear the brunt of any cuts it sanctions.
Discussions, which both the IMF and the government describe as “technical”, could run for seven to 10 days.
Pressure on the beleaguered coalition government intensified on Thursday when Mr Honohan said he believed the country would get a multibillion-euro IMF loan.
However, Taoiseach Brian Cowen repeated that “no formal application” had been made for a bailout or loans but accepted that talks with the EU were intensifying since the meeting of EU finance ministers in Brussels earlier this week. Mr Cowen also stressed that the country had not surrendered its sovereignty, claiming the economy remained strong and sustainable. He said letting in the IMF was not shameful.
Finance minister Brian Lenihan appeared to signal the government’s desired way out of the financial mess – “substantial contingency capital”, or “CoCo” as it has become known in the banking world.
Money would be borrowed from the IMF and the EU, with other bilateral funds paid into a pot, in effect creating a massive cash buffer for the banks in the event of another black hole. The loans would be guaranteed by an elaborate share scheme triggered if the banks’ finances hit a red alert mark. Lloyds of London adopted a similar approach to tackle funding issues.