–Originally transmitted at 15:29 ET on Sunday

FRANKFURT (MNI) – Following is the text of the statement issued
Sunday by the Irish government following the decision of European
Finance Ministers to grant financial aid to Ireland, which is to receive
a total of up to E85 billion from Eurozone and non-Eurozone EU members
(including Ireland itself, which will cease to contribute to Greek aid),
European rescue facilities as well as the International Monetary Fund:

“The Government today agreed in principle to the provision of E85
billion of financial support to Ireland by Member States of the European
Union through the European Financial Stability Fund (EFSF) and the
European Financial Stability Mechanism; bilateral loans from the UK,
Sweden and Denmark; and the International Monetary Fund’s (IMF) Extended
Fund Facility (EFF) on the basis of specified conditions.

The State’s contribution to the E85 billion facility will be E17.5
billion, which will come from the National Pension Reserve Fund (NPRF)
and other domestic cash resources. This means that the extent of the
external assistance will be reduced to E67.5 billion.

The purpose of the external financial support is to return our
economy to sustainable growth and to ensure that we have a properly
functioning healthy banking system.

The external support will be broken down as follows: E22.5 billion
from the European Financial Stability Mechanism (EFSM); E22.5 billion
from the International Monetary Fund (IMF); and E22.5 billion from the
European Financial Stability Fund (EFSF) and bilateral loans. The
bilateral loans will be subject to the same conditionality as provided
by the programme.

The facility will include up to E35 billion to support the banking
system; E10 billion for the immediate recapitalisation and the remaining
E25 billion will be provided on a contingency basis. Up to E50 billion
to cover the financing of the State. The funds in the facility will be
drawn down as necessary, although the amount will depend on the capital
requirements of the financial system and NTMA bond issuances during the
programme period.

If drawn down in total today, the combined annual average interest
rate would be of the order of 5.8% per annum. The rate will vary
according to the timing of the drawdown and market conditions.

The assistance of our EU partners and the IMF has been required
because of the present high yields on Irish bonds, which have curtailed
the States ability to borrow. Without this external support, the State
would not be able to raise the funds required to pay for key public
services for our citizens and to provide a functioning banking system to
support economic activity. This support is also needed to safeguard
financial stability in the euro area and the EU as a whole.

*Programme for Support*

The Programme for Support has been agreed with the EU Commission
and the International Monetary Fund, in liaison with the European
Central Bank. The Programme builds on the bank rescue policies that have
been implemented by the Irish Government over the past two and a half
years and on the recently announced National Recovery Plan. Details of
the measures are set out in the accompanying Notes for Editors.

The Programme lays out a detailed timetable for the implementation
of the measures contained in the National Recovery Plan.

The conditions governing the Programme will be set out in the
Memorandum of Understanding and the Government will work closely with
the various bodies to ensure that these conditions are met. The funding
will be provided in quarterly tranches on the achievement of agreed
quarterly targets.

The Programme has two parts – the first part deals with bank
restructuring and reorganisation and the second part deals with fiscal
policy and structural reform. The requirement for quarterly progress
reports covers both parts of the programme. When the documentation on
the Programme is finalised, it will be laid before the Houses of the
Oireachtas.

*Bank Restructuring and Reorganisation*

The Programme for the Recovery of the Banking System will be an
intensification of the measures already adopted by the Government. The
programme provides for a fundamental downsizing and reorganisation of
the banking sector so it is proportionate to the size of the economy. It
will be capitalised to the highest international standards, and in a
position to return to normal market sources of funding.

*Fiscal Policy and Structural Reform*

The Ecofin has acknowledged the EU Commission’s analysis that a
further year may be required to achieve the 3% deficit target. This
analysis is based on a more cautious growth outlook in 2011 and 2012 and
the need to service the cost of additional bank recapitalisations
envisaged under the programme. The Council has today extended the time
frame by 1 year to 2015.

The Programme endorses the Irish Government’s budgetary adjustment
Plan of E15 billion over the next four years, and the commitment for a
substantial E6 billion frontloading of this plan in 2011. The details of
the Programme closely reflects the key objectives set out in the
National Recovery Plan published last week. The adjustment will be made
up of E10 billion in expenditure savings and E5 billion in taxes.

The Programme endorses the structural reforms contained in the Plan
which will underpin a return to sustainable economic growth over the
coming years.

The Government welcomes the support shown to Ireland by our
Eurozone partners and in particular by the United Kingdom, Sweden and
Denmark who have expressed their willingness to offer bilateral
assistance. The Government also welcomes the assistance of the IMF.

As part of the Programme, Ireland will discontinue its financial
assistance to the Loan Facility to Greece. This commitment would have
amounted to approximately E1 billion up to the period to mid-2013.”

–Frankfurt bureau tel.: + 49-69-720142. Email: frankfurt@marketnews.com

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