A former deputy director of the International Monetary Fund has predicted that Ireland will need a second bailout in 2013 when the current IMF-EU rescue package runs out.
Barely six months after the country's €85bn deal was sealed, Donal Donovan has said the country could continue to need assistance up to 2015.
The European Central Bank would eventually come around to the idea of writing off some of Ireland's debt, he said, because by 2013 external agencies like the IMF were "likely" to deem Ireland's debt to GDP "unsustainable". Ireland's debt to GDP ratio is expected to rise to between 115 and 120 per cent in 2013/14.
"The IMF has no problem with the principle of debt rescheduling," he said.
"I think the EU has more difficulties with the idea of rescheduling. They are new to the game, they're worried about the reputational loss to the euro," he said as well as worried that "other countries [might] be tempted to follow some more profligate policies if they feel a debt rescheduling exit if they get into trouble".
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