Ireland slams IMF speculation as tension looms over its budget

IRELAND’S finance ministry and the International Monetary Fund (IMF) have sought to calm markets after a report on the possibility of an IMF bailout spooked investors.

The cost of insuring Irish sovereign debt against default hit a record high and the Irish/German spread reached a euro lifetime peak after the Irish Independent newspaper said Ireland was “perilously close” to calling in the IMF and the EU.

The IMF said it did not foresee that its financial assistance would be needed for Ireland and praised Dublin’s efforts at propping up its banking system.

Ireland’s Department of Finance slammed the Irish Independent article. “There is absolutely no truth to a rumour concerning external assistance. It is based on a local misinterpretation of a research report,” a spokesman said in a statement.

The newspaper cited a report from Barclays Capital. Barclays said Ireland’s liquidity position was comfortable but if unexpected banking losses emerged or economic conditions deteriorated outside help may be needed.

“The report is a lot more measured than what has been reflected in the newspaper,” said Geraldine Concagh, at Allied Irish Banks.