Statement from EcoFin
Council approves aid to Ireland, sets out conditions
The Council today adopted a decision providing financial assistance to Ireland and a recommendation setting out the conditions attached to the aid.
Loans amounting to EUR 22.5 billion will be granted under the European Financial Stability Mechanism (EFSM) as part of a EUR 85 billion package of financial assistance, on the basis of a programme negotiated with the Irish authorities by the Commission and the International Monetary Fund, in liaison with the European Central Bank.
The Council's recommendation takes up the conditions set in the programme , namely an overhaul of Ireland's banking system, growth-enhancing reforms and the reduction of Ireland's government deficit below 3 % of gross domestic product by 2015, extending a previous 2014 deadline.
The package, agreed by ministers at an informal meeting on 28 November in response to a request submitted by the Irish authorities on 22 November, includes:
- EUR 10 billion to be used immediately to recapitalise Irish banks, with a EUR 25 billion contingency reserve;
- EUR 50 billion to cover the financing needs of the Irish government's budget.
Half of the banking support measures (EUR 17.5 billion) will be financed by an Irish contribution through its treasury cash buffer and investments in Ireland's National Pension Reserve Fund. The remainder of the overall package (i.e. EUR 22.5 billion each) will be shared equally amongst: (i) the EFSM, (ii) the European Financial Stability Facility, together with bilateral loans from the United Kingdom, Denmark and Sweden , and (iii) the International Monetary Fund.
Ireland has been the subject of an excessive deficit procedure since April 2009, when the Council set out measures to reduce the deficit to below 3 % of GDP by 2013. But in response to a worsening of the economy, whilst acknowledging Ireland's compliance with its recommendations, the Council in December 2009 agreed to extend the deadline to 2014.