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8A – Daily News – Monday, November 22, 2010 Business Ireland says EU, IMF agree to fund emergency aid DUBLIN (AP) — Debt- struck Ireland formally applied Sunday for a mas- sive EU-IMF loan to stem the flight of capital from its banks, joining Greece in a step unthinkable only a few years ago when Ireland was a booming Celtic Tiger and the economic envy of Europe. European Union finance ministers quickly agreed to the bailout, saying it ‘‘is warranted to safeguard financial stability in the EU and euro area.’’ The European Central Bank, which oversees monetary policy for the 16- nation eurozone, wel- comed the agreement and confirmed that the Interna- tional Monetary Fund would contribute financ- ing, while Sweden and Britain — not members of the euro currency — said they were willing to pro- vide bilateral loans to Ire- land, too. Irish Finance Minister Brian Lenihan spent much of the night talking to other eurozone financial chiefs about the complex terms and conditions of the emer- gency aid package taking shape. Lenihan said Ireland needed less than 100 bil- lion ($140 billion) to use as a credit line for its state- backed banks, which are losing deposits and strug- gling to borrow funds on open markets. The money will come from the EU’s executive commission and a financial backstop set up by eurozone nations earlier this year. There may also be additional bilateral loans from countries outside the eurozone. Ireland has been brought to the brink of bankruptcy by its fateful 2008 decision to insure its banks against all losses — a bill that is swelling beyond 50 billion ($69 bil- lion) and driving Ireland’s deficit into uncharted terri- tory. This country of 4.5 million now faces at least four more years of deep budget cuts and tax hikes totaling at least 15 billion ($20.5 billion) just to get its deficit — bloated this year to a European record of 32 percent of GDP — back to the eurozone’s limit of 3 percent by 2014. The European Central Bank and other eurozone members had been press- ing behind the scenes for Ireland — long struggling to come to grips with the true scale of its banking losses — to accept a bailout that would reassure investors the country won’t, and can’t, go bank- rupt. Those fears have been driving up the already inflated borrowing costs of several eurozone members, particularly Portugal and Spain, on bond markets. Still, the rapid pace of Sunday’s humiliating Irish U-turn surprised many ana- lysts. More than 30 bank- ing experts from the IMF, ECB and European Com- mission had arrived in Dublin only three days before to begin poring over the books and projections of the government, treasury and banks, a mammoth task expected to take weeks. But Lenihan said it was now painfully clear that Ireland couldn’t go it alone any longer, and its cutthroat plans for recovery would require a major shot of ‘‘financial firepower’’ immediately. Lenihan said Ireland SHOP SMALL JOIN THE MOVEMENT AT: FACEBOOK.COM/SMALLBUSINESSSATURDAY ©2010 AmericanExpress Bank,FSB.All rights reserved. NOVEMBER 27 help your favorite local businessesstart booming On November 27th, support the small business owners who are getting our economy going again. Shop your favorite local stores on the first-ever Small Business Saturday. SM was asking eurozone and IMF donors to loan money to a ‘‘contingency’’ fund from which Irish banks could borrow. He said the funds would ‘‘not necessar- ily’’ be used. He empha- sized that the government’s own operations are fully funded through mid-2011. ‘‘Not all the money will go in (to the banks) at all. It’s a standby fund,’’ Leni- han told Irish state broad- casters RTE. Ireland’s move comes just six months after the EU and IMF organized a 110 billion ($150 billion) bailout of Greece and declared a 750 billion ($1.05 trillion) safety net for any other eurozone members facing the risk of imminent loan defaults. It demonstrates that creating the three-layered fund did- n’t, by itself, reassure glob- al investors that it would be safe, or smart, to keep lend- ing to the eurozone’s weak- est members. Ireland’s precipitous fall has been tied to the fate of its overgrown banks, which received access to moun- tains of cheap money once Ireland joined the eurozone in 1999. The Dublin banks bet the bulk of its borrowed funds on rampant property markets in Ireland, Britain and the United States, a strategy that paid rich divi- dends until 2008, when investors began to see the Irish banking system as a house of cards.