EFSF head does not see Ireland, Portugal asking for aid

21st September 2010, Comments 0 comments

The European Financial Stability Facility, set up to aid debt-laden eurozone countries, does not think Ireland or Portugal will ask for help, EFSF head Klaus Regling said Tuesday in an interview.

The two countries are nonetheless under strong financial pressure, along with Greece which benefits from a separate European Union and International Monetary Fund rescue plan.

"I do not think the worst will happen and that we will have to borrow" to help Dublin and Lisbon, Regling told the German business daily Handelsblatt.

"Sometimes markets overreact," Regling said, referring to how the three weaker eurozone countries face soaring costs to borrow on the financial markets as they try to put their public finances in order.

Ireland was in the spotlight Tuesday as it sought to raise up to 1.5 billion euros (1.96 billion dollars) in four- and eight-year bonds, with the outcome being closely watched to see if the market will provide the funds -- and at what price.

Irish central bank governor Patrick Honohan said Monday that the government must go further to bring the country's public deficit below three percent of gross domestic product (GDP) by 2014, the European Union limit, as it has pledged to do.

His comments raised tension on financial markets but Regling said: "I cannot imagine that the central bank would question savings targets agreed upon with the European Union."

He acknowledged that "of course, there are always risks in the eurozone," but added: "I think the markets will calm down as soon as Ireland has adopted its 2011 budget."

The EFSF was created in May to run for three years, being prepared to raise funds on the money markets to buy debt issued by troubled eurozone countries if they face problems in raising the needed finance directly.

© 2010 AFP

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