Reeling Ireland seeks IMF help with financial crisis

Reeling Ireland seeks IMF help with financial crisis

Ireland expectedly sought a huge loan from the International Monetary Fund on Sunday, as the former European economic powerhouse tries to recover from a severe financial crisis, a downward spiral that has plagued its banking system. Similarly, Greece suffered from such a crisis and has since secured a rescue package from the worldwide financial institution.

Anticipating Ireland’s move, finance officials of the European Union swiftly approved the rescue loan, saying that the plan “is warranted to safeguard financial stability in the EU and euro area.” Details of the package will need to be discussed and finalized in the coming weeks. The crisis was spurred by capital flight from Irish banks, the effect of which has also affected Eurozone lightweights Portugal and Spain, which may need their own rescue deals down the road despite the approval of the Irish loan. The package for Dublin is intended to “contribute to ensuring the stability of the Irish banking system,” the European Central Bank said. In addition to EU’s help, the United Kingdom and Sweden expressed willingness to help Ireland through bilateral loans.

Eurozone finance authorities met with Ireland’s Finance Minister Brian Lenihan on Sunday to discuss the requirements and conditions associated with the loan package. As much as 100 billion euros or $140 billion is needed to be loaned to government-supported Irish banks which have lost deposits and has failed to secure loans from outside lenders. Lenihan estimates that it would take three to nine years for Ireland to use the loans. The country’s ill-fated decision to guarantee all of its bank’s losses in 2008 has triggered its current financial difficulty.

Posted by James Fried on Monday November 22 2010, 4:31 AM EST. Ref: Associated Press. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0