Government’s bailout announcement derived from German political considerations, says FF

The Government's decision to exit the bailout with a "clean break" was partly attributable to the political situation in Germany, Fianna Fáil has claimed.

The party's finance spokesman Michael McGrath pointed to the situation in Germany where a grand coalition is being formed and the difficulties that might have been posed had Ireland sought a backstop from Europe and the IMF.

“This is about German politics. It is about Irish politics. There would have been a headache in Berlin if they had to get parliamentary approval for a precautionary credit line for Ireland.”

Fianna Fáil colleague Dara Calleary said clarity was needed on the role that German development bank KfW will play in Irish lending.

“This is an extremely vague announcement that raises more questions than it answers. People are wondering what exactly this means for the Irish banking sector, for Irish taxpayers and for Irish businesses,” said Mr Calleary.

"People will also be wondering where this leaves the programme for government commitment to establish a strategic investment bank. Is this German bank being brought in to replace plans for a State-run Irish institution that can provide a permanent solution to the current credit crisis? And is the Government finally acknowledging that its two-pillar bank strategy is not working for the economy?"

Change in the markets
Fianna Fáil also argued that it would have been better for the Government to have availed of precautionary funding as some €30 billion in additional funding would need to be raised between now and 2016. It said the credit line would have been an insurance policy to buffer against any unanticipated change in the markets.

Sinn Féin said the Government had followed its advice in exiting the bailout without seeking an international backstop. Party leader Gerry Adams warned that the troika may have left Ireland but that the "troika mindset" would remain.