Ireland says may not need financing backstop to exit bailout

Reuters

By Conor Humphries

DUBLIN (Reuters) - Ireland may exit its EU-IMF bailout without requesting a financing backstop from its European partners, its finance minister said on Saturday, a move that would block its access to European Central Bank bond-buying.

The comments underline Ireland's confidence as it prepares to become the first euro zone country to leave an international bailout, a development the European Union hopes will signal worst of its debt problems are over.

Dublin last month said it would seek a 10 billion euro ($14 billion) precautionary credit line from the euro zone to insulate it against market shocks, but EU officials in recent days have suggested that may not be necessary.

"IMF countries that exited bailout programmes in the past had a kind of precautionary programme attached ... but we have a very significant backstop because the NTMA (national debt agency) is carrying cash buffers of about 25 billion euros," Noonan told his Fine Gael party's annual conference.

"The cash buffers have given us the kind of backstop that we need," he said.

The comments come a day after EU Economic and Monetary Affairs Commissioner Olli Rehn said Ireland had a "very good chance" of exiting its bailout programme successfully without a precautionary programme.

Refusing to take a precautionary credit line would block Ireland from accessing to the European Central Bank's as-yet-unused Outright Monetary Transactions (OMT) programme of government bond purchases.

The National Treasury Management Agency last week said it would not tap bond markets in the final quarter of the year, a move seen as necessary to prove the country has secured the "regular market access" demanded by the OMT.

Avoiding a precautionary credit line would reduce the conditions and close monitoring from European officials and would bolster the government's claim to have restored the country's economic sovereignty lost by the previous government.

Noonan also told the party conference that his budget next week would reduce Ireland's deficit next year to 4.8 percent, down from a forecast 7.3 percent this year and well below the 5.1 percent maximum under the bailout programme. ($1 = 0.7373 euros)

(Reporting by Conor Humphries; Editing by Ron Askew)

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