Thursday, 10 May 2012
Gilmore defends €11bn cost commitment to European bailout fund
TANAISTE Eamon Gilmore has said it is not unreasonable for Ireland to commit €1.27bn to a pot of European emergency funds and defended plans that could cost the country €11bn.
Even though the initial sum will be paid regardless of the referendum result, Tanaiste Eamon Gilmore defended plans which could ultimately cost €11bn.
The Labour leader said it is not unreasonable for member states to contribute to the European Stability Mechanism (ESM) bailout fund.
"The euro needs to have a supporting mechanism, a supporting fund which is an emergency fund for the members of the eurozone," said Mr Gilmore.
"That's what the ESM is about. It's not unreasonable. I think it's important that every country that is a member of the euro contributes to that."
The ESM is expected to be worth around €700bn after the European countries that have signed up to the stability treaty make their individual contributions.
Ireland will commit itself to giving 1.6pc of the total ESM fund: around €11bn.
However, the Tanaiste insisted not all this money will need to be handed over.
Ireland will pay €1.27bn to the fund in five equal instalments over the next three years, working out at around €254m a go.
It will be forced to pay the remainder of the €11bn if a member state calls upon the ESM in an emergency bailout situation.
A Department of Finance spokesman confirmed that the initial €1.27bn Ireland is due to pay will make up a European target of €80bn.
Having shored up a collective €80bn from the 25 states that are expected to have ratified the preceding stability treaty, the fund can then enter international markets and aim to raise up to €700bn.
Mr Gilmore said: "The primary issue for Ireland is that we want to have access to it if we need it and if the treaty is defeated, we will not have access to it."
However, People Before Profit TD Richard Boyd Barrett, one of the most outspoken opponents to the stability treaty, argued that Ireland should not have to pay money into a pot if it votes against the fiscal deal in the May 31 referendum.
Even if Ireland rejects the treaty, which aims to impose stricter budgetary controls across Europe, it may still enter the deal and will be bound to pay into the ESM.
The treaty will come into effect provided 12 of the 25 European states that have signed up ratify it.
Following its implementation, the ESM treaty will then have to be passed in European parliaments.
For that to happen, 90pc of shareholders will have to have made their agreed contributions