Six years after its banks collapsed under a ton of toxic mortgages, and three years after receiving a $93 billion international bailout, Ireland is about to make history. On Dec. 15, it will be the first euro-area country to emerge from its rescue program.
An inspection team from the European Union, the European Central Bank and the International Monetary Fund — the so-called troika — descended on Dublin on Oct. 29 for a 10-day negotiation over what comes next.
Ireland sees its exit from the bailout and the demanding conditions that went with it as restoring the country’s sovereignty. It’s impatient to break free. That’s why the government is hesitant to seek an emergency line of credit, which would again come with strings. This hesitation is understandable, but it’s a mistake nonetheless.
The Irish recovery is weak, and new setbacks are possible. A credit line, preferably one that would preserve Ireland’s eligibility for the European Central Bank’s bond-buying program, would help to calm investors’ nerves. The troika should urge Prime Minister Enda Kenny to accept a safety net — and make it easy for him to do so. It shouldn’t demand more budget cuts or tax increases, which would stifle growth and inflame popular opposition.
Bloomberg News (Nov. 6)