Ireland will take a loan of billions of euros from the European Union, according to the head of the Irish central bank.
Governor Patrick Honohan told RTE radio he expected the bail-out loan to amount to “tens of billions” of euros.
The final decision will be taken by the Irish government, which has not yet commented. Honohan said: “The intention is and the expectation is, on their part and personally on my part, that negotiations or discussions will be effective and a loan will be made available and drawn down as necessary.
“We’re talking about a very substantial loan for sure … tens of billions yes, I don’t know that any precision has been put on it at this stage yet.”
A team of officials, including representatives from the International Monetary Fund, the European Central Bank and the EU are due to arrive in the Irish Republic later for further talks on the debt crisis.
The Irish government has denied that it needs the loan, but it is unlikely to withstand pressure from its Eurozone neighbours to accept a bail-out.
The BBC’s business editor Robert Peston said:
“The Irish government could not conceivably go against the advice of its [eurozone] partners and its central bank.”
If it did so, commercial customers of Irish banks would accelerate withdrawals which would be devastating, he said.
EU-IMF will analyse Ireland’s state and bank finances and decide on the measures needed to reassure markets that Ireland will not default on debts.
It has been estimated that Ireland’s banks need over £42bn to survive but the losses are compounded every month by worsening bankruptcies, mortgage arrears, a run on deposits and loan defaults.