Credit rating agency Moodys has said that Ireland may face the need for a second bailout once the current bailout taken through the IMF/EU runs out at the end of 2013.
The agency warned that Ireland might have difficulty regaining access to the European market once that deal expires. In that case, it said, Ireland may have to rely, at least partially, on funding from the European Stability Mechanism, a rescue funding programme to be implemented by the EU after July of this year.
Moodys also said that a “no” vote on the upcoming referendum on the fiscal treaty would affect Ireland’s ability to draw from this fund, putting the country under financial duress.
“If voters reject the referendum, it could also leave Ireland isolated, particularly if it ends up being the only euro area country to reject the pact,” it said.
However, Finance Minister Brian Hayes last night rejected the predictions, telling the Irish Times the the warnings were “fanciful”, especially “given the extraordinary volatility we’re witnessing from one quarter to the next and given the crisis that the country and euro zone have come through.”
Mr. Hayes did warn that a rejection of the fiscal treaty could leave Ireland in a precarious situation and that the European Stability Mechanism acted as a fail-safe for the worst-case scenario.
“It’s a prudent strategy to be able to access this fund into the future, and the best way to have absolute certainty about that is to be part and parcel of the EU’s fiscal treaty,” he said.
Ireland currently is in receipt of a €67.5 billion bailout from the European Union, required, largely, to bailout failing bank Anglo Irish at a cost of €29.3 billion.