Ireland’s bookkeeping could save faltering ECB

Global Business

Ireland's bookkeeping could save faltering ECB1

European economic growth is coming under more pressure yet again thanks to the bad loans on the books of many European banks. Now, the European Central Bank is scrambling for strategies to contain the damage and Ireland might lead some banks a a new direction.

CCTV’s Lourda Sexton reports.

Ireland\'s bookkeeping could save faltering ECB

Ireland\'s bookkeeping could save faltering ECB

European economic growth is coming under more pressure yet again thanks to the bad loans on the books of many European banks. Now, the European Central Bank is scrambling for strategies to contain the damage and Ireland might lead some banks a a new direction.CCTV’s Lourda Sexton reports.

Ireland suffered one of Europe’s biggest banking crises, leading the government bailing out banks at a cost of 64 billion euros ($72.8 billion).

During the collapse, the country’s debt skyrocketed- the debt to GDP ratio peaked at more than 125 percent. In order to manage the debt, the country set up a bad bank.

“The scale of the problem was enormous. We paid the banks 32 billion for the 74 billion worth of loans and we set the objective of a 10 year plan to have all our debt repaid by 2020,” Brendan McDonagh, CEO, National Asset Management Agency said. “Currently, we have 80 percent of our senior debt repaid with the target of 100 percent repaid by 2018, and we are about two and half years ahead of schedule at this stage.”

Ireland’s debt to GDP ratio continues to fall- it’s now well below 100 percent.

In order to prevent another collapse- Ireland recapitalized its banks.

And according to Ireland’s Finance Minister, almost a third of the bailout funds have now been repaid. But given the country’s inconclusive general election results in February, there is concern that a political deadlock over a long period could impact the government’s ability to borrow money.