–Adds More Comments On Ireland, As Well As Comments On Portugal, Greece

BRUSSELS (MNI) – Talks on a possible loan deal for Ireland are
intensifying and a technical mission of officials from the European
Central Bank, the European Union and the International Monetary Fund
will travel to Dublin to prepare a possible programme, EU officials said
on Tuesday night.

The officials stressed that debt-ridden Ireland hasn’t asked for
aid yet and the talks, which they expect to be “short” and “focused,”
are only preparatory at this stage. They wouldn’t be drawn on the size
of the aid deal under discussion or the timing of such a deal.

“We have decided with the Irish government to intensify talks with
the EU troika,” Olli Rehn, the European Commissioner for Economic and
Monetary Affairs, told reporters at a press conference after a regular
monthly meeting of Eurozone officials here.

He said the plan would focus on the banking sector and be ready in
case the Irish government does decide to ask formally for help.

“It is essential that Ireland complete its financial repair and in
fact the discussions between the Irish government on the one hand and
the Commission, ECB and IMF on the other hand are mostly focusing on the
question of the restructuring of the banking sector,” Rehn said.

Luxembourg’s Prime Minister and Eurogroup President Jean-Claude
Juncker said the Eurozone has the means and the will to financially
assist Ireland, if the country wants help.

“We welcome the decision of the Irish government to engage in
discussion” with the European Commission, European Central Bank and
International Monetary Fund, particularly with regard to the country’s
banks, Juncker told reporters at the press conference.

“We confirm that we will take action to safeguard the financial
stability of the euro if that is needed,” Juncker said.

“Market conditions have not normalised yet,” he added, underlining
that the Eurozone has the means and the will to bail out Ireland “were
it to make a request for assistance.”

The officials expressed their “confidence” in the Irish government
and its strategy.

“We particularly welcome the announcement by the Irish authorities
that their 4-year budgetary strategy will involve a E6 billion
front-loading in 2011 on a total consolidation effort of E15 billion,”
Juncker said.

“We have full confidence that the strategy to be announced at the
end of the month will be thorough and detailed and will thus allow us to
have full faith in dealing with the deficit by 2014,” he added.

The meeting Tuesday evening was also attended by ECB President
Jean-Claude Trichet and Klaus Regling, head of the European Financial
Stability Fund (EFSF).

Regling said the EFSF could go to the markets quickly if it was
needed and that there was investor interest in the funding provided by
the EFSF, especially in Asia.

Ireland is planning E15 billion of cuts over the next 4 years to
brings its deficit back below the EU’s 3% limit, but the market doesn’t
believe it will be able to cut its debt burden without external help.

Slower than expected growth and the cost of bailing out the its
banking system will push Ireland’s budget deficit to 32% of its GDP this
year. The Irish government has committed to getting the deficit below
the EU’s 3% limit by 2014. Stripping out the banks, the deficit will be
around 11.9% this year, still one of the largest in the Eurozone.

Some Eurozone finance ministers have expressed concerns about a
contagion effect to other high debt and deficit countries such as
Portugal, prompting speculation that they too are poised to tap
emergency funding.

But European officials attempted to dampen such speculation.

“The Portuguese minister made it crystal clear that he never did
indicate that Portugal is willing to present a request under the regime
of the mechanism,” Juncker said.

Rehn said Portugal and Ireland’s problems were very different and
that Lisbon has taken “bold” and “substantive” measures to address its
problems.

The ministers also welcomed the progress made by Greece on its
Eurozone and International Monetary Fund Programme.

Juncker said Greece needs to provide more detail on its 2011 budget
plan and also needs to detail more spending cuts and structural reforms
for 2011.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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