Parliament vote stalls IMF's loan to Ireland

The International Monetary Fund (IMF) postponed approving a multi-billion euro loan for Ireland yesterday, after prime minister Brian Cowen said he would seek parliamentary approval for the bail-out.

Mr Cowen is expected to get the €85 billion (71bn) joint IMF and European Union rescue package through the lower chamber next week, but his politically charged decision to put it to a vote creates uncertainty and delays that investors will not appreciate.

Highlighting the depth of Ireland's crisis, data yesterday showed the country's banks' growing dependence on funding from the European Central Bank and its own central bank, with estimated borrowings of some €140bn.

The bail-out is meant to wean Irish banks off such assistance, halting an outflow of corporate deposits and allowing them to return to term funding markets again.

However, analysts said banks' addiction to such funding would continue until they laid out plans to shrink their assets, a requirement of the emergency aid, and started selling off loans next year.

The IMF's board will consider its €22.5bn portion of the bail-out on Thursday assuming Ireland's parliament passes the package in a vote on Wednesday.

Finance minister Brian Lenihan told parliament he expected Ireland to start accessing external funding early next year.