DUBLIN—The European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) issued a joint statement on the Financial Measures Programme in Ireland on March 31st.
The statement declared that the “comprehensive announcements by the Irish authorities are a major step toward restoring the Irish banking system to health, which is crucial for sustained revival of growth and employment.
“Consistent with the programme supported by the EU and IMF, the Central Bank, together with leading international consulting firms, has identified the banks’ capital needs based on thorough and transparent valuations of bank assets and stringent stress tests conducted with an appropriately high minimum capital ratio, which will ensure a sound capital basis of the banks.
“The EC, ECB, and IMF staffs welcome the rigorous capital needs assessment and strongly support the authorities’ plans to ensure that these capital needs are met in a timely manner. The capital needs can be funded comfortably under the programme supported by the EU and IMF,” according to the statement.
Hinting at possible future sales of state assets, the statement continued: “The related plans to deleverage bank balance sheets, including through phased sales of non-core assets over time, will reinforce the benefits of higher capital and help banks regain access to the market sources of financing needed to enable renewed lending."
According to the statement, “The Irish government also made important announcements on the future structure of the banking system, and the staffs of the EC, ECB and IMF endorse this strategy to focus on the development of two strong pillar banks with sound business models able to serve the Irish economy’s needs."
On the same day, the director of the external relations department of the IMF, Caroline Atkinson, made reference to Ireland at a press briefing. Asked whether the IMF believes that the Irish government should restructure unguaranteed bank bonds, she replied: “That is like (asking them): ‘Have you stopped beating your wife?’”
Ms Atkinson stated that she did not wish to discuss the Irish question in depth before the IMF mission to Ireland. She did, however, field questions from members of the press regarding the situations in Greece, Spain and Portugal, which were asked in the light of a political impasse in Portugal and the lowering of Greece’s bond status to ‘Junk’ by rating agency Standard & Poors.
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