Ireland’s financial collapse and political turmoil
Hit hard by the real estate crash and banking crisis of 2008, Ireland has since had to make deep spending cuts and a humiliating appeal to the IMF and Europe for a rescue package.
As a result, Prime Minister Brian Cowen’s Fianna Fael-led government now has the dubious honor of being Ireland’s most unpopular in recent memory, with one recent poll putting Cowen’s support at 17 percent.
Cowen’s government, backed by independent MPs, approved an 85 billion euro IMF/EU bailout on December 15.
But the opposition Fine Gael party, which will likely lead a coalition government after an election next year, has threatened to renegotiate the deal to force losses on some senior bondholders in Irish banks.
Follow a timeline below of the events that led to Ireland’s IMF/EU bailout and political turmoil.
Sept. 25, 2008 – Ireland becomes first euro zone country to slide into recession.
Sept. 30 – Ireland responds to the collapse of Lehman Brothers, approving a guarantee covering 400 billion euros ($530 billion) of liabilities at six Irish-owned banks. The package is later increased to 485 billion euros to cover foreign-owned banks with significant operations in Ireland.
Dec. 21 – Ireland agrees to inject 5.5 billion euros ($7.7 billion) into its three main banks, taking Anglo Irish Bank under its control.
March 30 – Standard and Poor’s downgrades Ireland’s credit rating from AAA to AA+. Fitch strips Ireland of its AAA credit rating on April 8, reducing it to AA-plus.
July 19, 2010 – Moody’s cuts Ireland’s credit rating by one notch to Aa2.
Aug. 25 – Standard and Poor’s cuts Ireland’s long-term rating by one notch to AA- and gives it a negative outlook.
Sept. 30 – Ireland discloses a worst case price tag of more than 50 billion euros ($68 billion) for bailing out its banks and announces it will have to make more budget savings.
Oct. 6 – Fitch cuts Ireland’s credit rating to A+ from AA-, citing the huge cost of cleaning up its banks. Fitch also puts its rating on negative outlook.
Nov 16 – Euro zone finance ministers agree to lay the groundwork for bailing out Ireland’s banking sector with the IMF.
Nov. 22 – EU and IMF officials begin working out details of the rescue package.
Nov. 24 – Ireland reveals a 15 billion euro ($20 billion) four-year austerity plan imposing spending cuts and tax increases to help pay for the bank crisis and meet the terms of the EU/IMF rescue.
Nov. 28 – The EU approves an 85 billion euro rescue for Ireland.
Dec. 7 – Ireland details the toughest budget on record, 6 billion euros in tax rises and spending cuts including cuts to child benefit and public sector pensions.
Dec. 9 – Fitch becomes the first ratings agency to strip Ireland of its ‘A’ credit status, slashing it by three notches to BBB+ following a request for an EU/IMF bailout.
Dec. 15 – Parliament approves the 85 billion euro EU/IMF bailout package, but the opposition threatens to renegotiate the deal to force losses on some senior bondholders in Irish banks.