Euro bailout fund chief warns Ireland not to ease up on austerity plans

DUBLIN Fri Jul 26, 2013 8:55am BST

Klaus Regling, CEO of the European Financial Stability Facility (EFSF), gestures before speaking at the International Institute for Strategic Studies (IISS) Fullerton Lecture in Singapore August 24, 2012. REUTERS/Tim Chong

Klaus Regling, CEO of the European Financial Stability Facility (EFSF), gestures before speaking at the International Institute for Strategic Studies (IISS) Fullerton Lecture in Singapore August 24, 2012.

Credit: Reuters/Tim Chong

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DUBLIN (Reuters) - Any slippage in Ireland's austerity targets "would not be well received" by those deciding whether to offer Dublin a post-bailout credit line, the head of the euro zone's rescue fund said in an interview with the Irish Times on Friday.

Klaus Regling also said he did not think the European Stability Mechanism (ESM) fund could take loss-making tracker mortgages off the books of Irish banks, a move the Irish government says would speed lenders' return to profitability.

Ireland is widely expected to become the first euro zone country to exit a bailout programme later this year.

But government ministers have hinted in recent months that the country might ease up on its plans for tax hikes and spending cuts worth 3.1 billion euros in an October budget.

Regling told the paper that Ireland's EU-IMF lenders had made "very clear that another 3.1 billion euro fiscal adjustment ... is the important next step."

But Regling demurred on whether that target was a precondition for any precautionary credit line, a backstop the Irish government is considering asking euro zone leaders to grant to ease its exit from the bailout.

"I don't know what the conditions would be, but if the agreed target were not reached I'm sure that would not be well received," Regling said.

Asked whether the ESM could take on loss-making tracker mortgages, which were granted during the boom at low interest rates and are dragging down Irish lenders, Regling said it would not be possible under current rules.

"That instrument doesn't exist at all for the ESM. And I don't see an appetite among the euro area countries to create a new instrument," he said.

(Reporting by Conor Humphries; Editing by Hugh Lawson)

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Comments (1)
2writestoo wrote:
Tell him to get stuffed Ireland. If France can be let of the hook with an extension to their breaking (again) of the EU fiscal rules and the Greeks to be given more bail out cash whilst failing to adhere to the austerity measures imposed by Merkel. Why should you be forced to jump through a Brussels hoop. The EZ can not afored for Greece to go bust or France will go with them. What do you not understand compared to Germany and France at the top of the aquatic food chain you are nothing more than that which slithers about at the bottom of a pond. The Irish for years screamed from the roof top to be freed from the oppression of the English and has now given their freedom up to Germany France, Poland Bulgaria, Estonia Latvia. Lithuania , Only the Irish could be so perverse.

Jul 26, 2013 11:20am BST  --  Report as abuse
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