The Irish Times reported on Friday that informal contacts were already under way between Brussels, Berlin and other capitals to assess their readiness to activate the EU's rescue fund in the event of an application from Dublin.
A spokesman for Ireland's finance ministry called the report "completely untrue.
Irish officials have insisted they have no intention of tapping the fund, stressing they are not in the same situation as Greece was back in May, when it was forced to seek a 110 billion euro ($150 billion) rescue from the EU and IMF.
Ireland is fully funded through mid-2011 and is therefore not currently at risk of a Greek-style liquidity crisis.
Dublin expects to return to the market early next year and hopes a four-year 15 billion euro austerity plan to be unveiled later this month and passage of the 2011 budget in early December will bring its borrowing costs down.
"We're not borrowing at the present time so I don't think any of what's going on at the moment is going to affect the real price of Irish borrowing," Communications Minister Eamon Ryan said on Friday. "When we do have to go out next year, I think there will be different circumstances."
But concerns remain about whether Irish borrowing costs will fall far enough by then to make debt refinancing sustainable, or whether the deeply unpopular Cowen can win passage of the budget on December 7 given his government's razor-thin majority in parliament.
Sure, that'll go great. Meanwhile, I'm expecting an Ireland bailout deal over the weekend now, because if it doesn't happen Sunday, the bond spreads will make it painfully clear that it needs to happen Monday. And the best part is as the ECB crew assured bondholders they will not take a haircut, it means Irish taxpayers will foot the bill for this mess on top of their already gruesome austerity package.
Not to get too cute here, but the "Time of Troubles" may be back with a vengeance.
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