Brian Lenihan, the Irish finance minister, will stick to his plan to return to the debt market, and this week he scoffed at suggestions the country's economic woes might force it to seek the help of the International Monetary Fund (IMF).
Lenihan insisted that 'the underlying economic structure is very strong,' and he reiterated that Ireland had already raised sufficient funds to finance its budget through to the middle of next year.
Last week Irish bonds were hit by a sell-off after a report by Barclays Capital suggested Ireland might have to seek IMF help if it suffered additional bank losses and economic deterioration.
But Lenihan's intervention is thought to be an attempt to calm market nerves ahead of a bond auction today, when the National Treasury Management Agency, which manages Ireland’s debt, is set to raise €1.5 billion ($2 billion) with a four-year and eight-year bond.
Concerns have centered on the rising costs of Ireland’s banks bail-out and its effect on the Irish government’s ability to curb its budget deficit, which at 11.6 per cent of gross domestic product is this year expected to be the biggest in the 16-member euro zone.
The market’s focus is on the fate of Anglo Irish Bank. The government has already provided €22.9 billion in state aid to maintain the nationalized lender. This month it also announced the bank would be broken up, with deposits kept in a savings bank while its loans go into an asset recovery bank wound down over time.
Lenihan said the government would provide the markets with a 'definitive estimate' of the cost of recapitalising Anglo Irish by the end of the month.
The government also insisted Ireland’s debt is manageable, with gross debt officially projected to peak at 98 percent of GDP in 2012.
Moving to Ireland
After living in Ireland for almost one year, this is what I’ve learned