Highlights: Key points of Ireland's bank rescue

(Reuters) – Ireland disclosed a mammoth “final” price tag of nearly 40 billion euros ($54.33 billion) on Thursday for bailing out its distressed banks and promised a new four-year budget plan in November.

Following are the key points of Thursday’s announcements:


Finance Minister Brian Lenihan said the bailouts will see a “very substantial spike” in Ireland’s budget deficit this year, raising the headline figure to around 32 percent of gross domestic product (GDP).

Taking away the one-off banking hit, Lenihan said Ireland was broadly on budget target for 2010 and remained fully committed to reducing its deficit to below the European Union’s 3 percent of GDP by 2014.

The full costs for Anglo Irish and Irish Nationwide will be added to Ireland’s general government debt, raising its debt to GDP ratio to 98.6 per cent this year. Lenihan said Dublin aimed to stabilize this ratio in the 2012/13 period.

He said the government will unveil a new four-year budget plan in November, incorporating annual measures for each year, to produce a “credible path to show how we propose to meet this commitment.”

The bill for Anglo and INBS will be spread out over at least a decade meaning that no additional borrowing arises this year as a result of this capital support to the banks.

With the exchequer fully funded through to the middle of next year, Ireland’s debt agency will not proceed with scheduled bond auctions in October and November, and will return to the bond markets in the normal way in early 2011.

Lenihan said that in dealing with Anglo and INBS, there would be “appropriate burden-sharing” with holders of subordinated debt instruments in both institutions.

To read more, visit: https://www.reuters.com/article/idUSTRE68T1MK20100930

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