Ireland succumbs to EU, IMF on €85-bn bailout

Ireland has become the second debt-struck European nation after Greece to resort to a financial rescue package by agreeing to the terms stipulated by the EU and the IMF in order to come out of the financial crisis triggered by the bad debts of the nation's banks.

The €85-billion aid package was signed off by the finance ministers of the 16 euro zone nations at a meeting in Brussels on Sunday, which was unanimously agreed by all the 27 EU finance ministers.

A joint statement issued by the EU commissioner Olli Rehn and the IMF managing director Dominique Strauss-Kahn said: ''The EC and bilateral lenders - together with the international community through the IMF - will offer financing that will be complemented by the Irish authorities so as to amount to €85 billion.''

''Swift and sustained implementation of this program will create a smaller banking sector that is robust and well capitalized, and able to serve the needs of Ireland's economy. It also offers a road map for sound public finances by setting strong, upfront actions in a multi-year framework,'' the statement said.

Of the total package, the EU and bilateral European lenders have pledged €45 billion, while the IMF will contribute €22.5 billion (SDR 19.5 billion) through its fast-track extended fund facility, and the balance €17.5 billion will be provided by Ireland's cash reserves and the national pension reserve fund.

The average interest rate for the 3-year funding has been agreed at 5.8 per cent, lower than the earlier media reports indicating up to 6.7 per cent. The rate is slightly higher than Greece's 5.2 per cent for its €110-billion bailout in May.