HOW WOULD AN IRISH BAILOUT WORK?

Q.WHAT FINANCING OPTIONS ARE AVAILABLE?
A. The European Union safety net consists of the European Financial Stability Mechanism (EFSM), which can lend up to €60bn and the European Financial Stability Facility (EFSF), which is backed by €440bn worth of Eurozone government guarantees.

On top of that, the International Monetary Fund (IFMF) can lend additional money and the IMF has said it was ready to provide up to 50 per cent of what Europe was providing.

Q.WHO WOULD LEND IRELAND MONEY FIRST?
A. If Ireland asks for and is granted a financing package, it would be from all three sources. Money from the EFSM would be paid out first, but EFSF cash and the IMF would also be involved, because the EU wants to avoid a situation where one country uses up all the funds available under the EFSM. The EFSM is available to all 27 EU members while the EFSF will lend only to the 16 countries of the Eurozone.

Q.HOW LONG WOULD IT TAKE TO EFFECT A RESCUE?
A. The mechanism has never been used before, but EU officials estimate it would take between three and five weeks from the application for assistance and the first disbursement of money.

Q.WHAT CONDITIONS WOULD AID CARRY?
A. The EU could insist Dublin reneges on an agreement with public sector unions not to cut jobs or push through further wage cuts. Brussels may also demand Ireland raises its corporation tax rate, viewed as sacrosanct by Dublin, from its current low level of 12.5 per cent.

Q.HOW MUCH MONEY WOULD IRELAND NEED?
A. Any bailout needs to be big enough to bring to a close uncertainty over whether future Irish bank loan losses could rattle the sovereign and destabilise the Eurozone. Eurozone sources estimate €45 to €90bn depending on whether Dublin needs money for its banking sector, or not.

Q.CAN IRELAND USE THE MONEY TO SUPPORT ITS BANKS?
A. Yes. While the EU funds cannot be accessed by Irish banks directly, the Irish government can borrow from the EFSM or EFSF and use the cash to support its banking sector.

Q.WHY IS IRELAND NOT KEEN ON EU HELP?
A. An EU bailout would mean a big loss of face for a country once feted for its rags to riches transformation and proud of its struggle for independence from Britain.