Greek exposure to Ireland much bigger than €350 million in bilateral loans – it’s closer to €2.6billion!
Brian Hayes MEP today said that Ireland’s total exposure to the Greek crisis is substantial enough and that Grexit could have a serious impact on our economy.
“While our trade links to Greece is small – we are on the hook like every other Eurozone country if Greece defaults to the ECB. Greece owes Ireland €350 million that was provided through bilateral loans as part of the bailout programme. However, the total exposure that Ireland has to Greece is in the order of €2.6 billion which equates to 1.4% of GDP.
“The additional exposure comes from interventions in the sovereign debt markets through the ECB Securities Market Programme. Additionally, Eurozone countries are exposed to Greece through the ECB’s Emergency Liquidity Assistance programme. All Eurozone countries guarantee ELA through their national central banks and if Greece defaults – the ECB lose and Ireland takes its share of that loss. So our exposure is much greater than simply the bailout money provided. The ECB also hold a substantial amount of Greek government debt, which must also be repaid.
“On 20th July, Greece has to pay €3.5 billion to the ECB in maturing bonds and as a Eurozone member Ireland has indirect exposure to this repayment. If this payment is missed the Eurozone system takes a hit and that includes Ireland because we have guaranteed a portion of the ELA support.
“A Greek default would have serious contagion effects in every Eurozone country. Independent research analysts have estimated that total Eurozone exposure to Greece at the end of April 2015 amounted to €331 billion or 3.3% of GDP. Ireland as a member of the Eurozone system is also liable for any Eurozone Greek default. So from our perspective – and from Greece’s perspective, a new deal and a negotiated settlement is in everyone’s interest. “