Ireland will detail how much a make or break plan to revive its banking system will cost later on Wednesday, setting the stage for possible further capital injections in the top two banks. The scheme is designed to kickstart lending and help bring western Europe's worst performing economy out of recession but the issuance of up to 60 billion euros ($88 billion) in bonds to finance it could nearly double national debt.
Prime Minister Brian Cowen said on Tuesday that the National Asset Management Agency (NAMA) would save Ireland from a long period of stagnation and a cabinet minister reiterated its importance ahead of a parliamentary debate on Wednesday. "There is an element of uncertainty but what is the feasible alternative?," Defence Minister Willie O'Dea said. "We have to have a banking system which injects liquidity into the market and allows credit to be available again," O'Dea told state radio RTE.
Trade unions and others opposing the plan are planning a protest outside parliament before Finance Minister Brian Lenihan details its estimated costs at around 1400-1500 GMT. Billionaire Irish financier Dermot Desmond voiced his opposition in an op-ed piece for Wednesday's Irish Times. The crux of the plan, dubbed the biggest financial gamble in modern Irish history, is what sort of haircut Lenihan will apply to the loans to reflect the impact of a spectacular property crash and appease a sceptical public, which fears he will overpay for the assets and lumber them with years of debt.