Global Biz

European officials: No bailout yet for Ireland

(Agencies)
Updated: 2010-11-17 08:02

BRUSSELS?- An anxiously awaited meeting of European finance ministers ended Tuesday without an agreement to bail out debt-stricken Ireland. But EU officials said they have "intensified" preparations for potential support for the country's troubled banking sector.

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Concerns that Ireland will be unable to pay the cost of rescuing its banks?- which ran into trouble when the country's real estate boom collapsed?- has worsened Europe's government debt crisis. Markets have pushed up borrowing costs for other vulnerable nations such as Portugal and Spain and threatened to destabilize the common euro currency.

There was speculation that Ireland's government itself might be forced to take a bailout like the one that saved Greece from defaulting on its bonds in May. A euro750 billion backstop stands ready from other countries that use the euro.

But the government in Dublin says it doesn't need one, although there has been discussion of help for its banks.

"The Irish authorities are committed to working" with the EU, the European Central Bank and the International Monetary Fund to "to determine the best way to provide any necessary support to address market risks, especially as regards the troubled banking sector," said EU monetary affairs chief Olli Rehn.

"This can be regarded an in intensification of preparations of a potential program in case it is requested and deemed necessary."

Ireland is making "significant efforts" to deal with its budget deficit, said Jean-Claude Juncker, who heads the group of 16 nations that use the euro.

"However market conditions have not normalized yet and pressure remains," Juncker said, adding that "we will take action as the eurogroup ... to safeguard the stability of the euro if that is needed."