Monday, 29 November 2010

EU announces €85 billion plan for Ireland

The bailout for Ireland takes shape. Reuters reports:

The EU approved an 85 billion euro ($115 billion) rescue for Ireland on Sunday and outlined a permanent system to resolve Europe's debt crisis, in which investors could gradually share the cost of any future default.

Finance ministers from the 16-nation euro zone, anxious to prevent market contagion engulfing Portugal and Spain, unanimously endorsed an emergency loan package to help Dublin cover bad bank debts and bridge a huge budget deficit...

Some 35 billion euros was earmarked to help restructure the shattered Irish banks, of which 10 billion will be an immediate capital injection and the rest a contingency fund. Ireland will contribute 17.5 billion euros of its own cash and pension reserves towards the bank rescue.

The rest of the emergency loans, which Dublin said were granted at an average interest rate of 5.8 percent, will help cover the giant hole the banks have blown in public finances. The IMF will contribute 22.5 billion euros.

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