IMF says ESM recap of Irish banks 'critical'

Europe must follow through on its pledge to ease Ireland's debt burden through direct recapilisation of its banks, or it risks leaving the country dependent on official financing, the International Monetary Fund said on Thursday. Dublin has been in talks for almost 18 months to ease the burden placed on state finances by its failed lenders.
A pledge by euro zone leaders on June 29 raised hopes in Dublin of a direct recapitalisation of Ireland's banks using the European Stability Mechanism bailout fund. "Delivering on European commitments, especially on direct bank recapitalisation, is critical to ensure that Ireland can continue to ensure Ireland can deepen its access to markets," the IMF's Ireland mission chief Craig Beaumont said in a conference call.
"Disappointing market expectations could risk Ireland needing ongoing reliance on official financing. That would miss an opportunity for a much-needed success in Europe." A 24 billion euro recapitalisation could cut Ireland's debt burden by up to 15 percent, he said. Beaumont said the IMF had cut Ireland's growth forecast for 2013 to 1.1 percent from 1.4 percent, a month after cutting it from 1.9 percent.