Irish Central Bank governor Patrick Honohan has confirmed that he expects that the Irish republic is expected to accept a "very substantial loan" worth "tens of billions" as part of an EU-backed bailout, reported the BBC and the Daily Telegraph this morning.
Mr Honohan is the first Irish official to publicly announce the need for the bail-out. Previously, the government has denied that it has requested aid and has insisted than the country is not on the brink of a multi-billion pound bail-out.
Although Honohan has insisted that the bail-out is necessary, no final decision on the terms of the bail-out have been made. The decision will be made by the Irish government, and will be made in a matter of days. Irish officials have agreed to work with a team of EU, European Central Bank, and International Monetary Fund economists, who are said to be travelling to Dublin today for further discussion on the debt crisis.
European Minister Dick Roche said: "They are going to look for a package, they must look for some form of arrangement, to deal with the continuous lack of confidence that is in the market that is affecting the Irish bonds."
City analysts believe that the EU-IMF loan will be made at a lower borrowing rate than borrowing from the financial markets. "The facility is rumoured to have a coupon of 5% on it - a hell of a lot cheaper than the bond market, which will metaphorically take the skin off your face," reported the Guardian today.
Although Ireland will clothe the loan as a bank bail-out, its September pledge to guarantee its banks renders any state/financial sector distinction meaningless.
Chancellor George Osborne has voiced his support of the Irish Republic during this period: "Ireland is our closest neighbour and it's in Britain's national interest that the Irish economy is successful and we have a stable banking system," he said in Brussels.