Ireland will be ready to re-enter bond markets as planned at the end of next year but will borrow commercially again only if it wants to, a senior government minister said on Tuesday, amid talk Dublin may eventually need a second bailout from the EU and the IMF.

Despite success in cutting its budget deficit, Ireland's aim of exiting its existing 85 billion euro (70 billion pound) rescue programme in 2013 is looking increasingly difficult as the euro zone debt crisis hits its growth outlook and keeps its sovereign debt yields sky-high.

Ruairi Quinn, the government's education minister and a former finance minister, said the plan was still to return to bond markets next year but signalled such a move would happen only if Dublin thought it made financial sense.

We intend still to be in a position to re-enter the markets at the end of 2013 should we want to do so, Quinn, who served as finance minister between 1994 and 1997, told Ireland's Newstalk radio station.

Analysts have said if Irish borrowing costs are still around 8 percent in 2013 then Dublin would have to tap European partners for additional official funding, which currently costs Dublin over 3 percent.

Citigroup chief economist Willem Buiter said on Monday that Ireland would need to restructure part of the country's bank bailout bill or else it may have to follow Greece in making investors take losses on its sovereign debt.

The comments from Buiter, a former member of the Monetary Policy Committee of the Bank of England, prompted debate about a second bailout on Irish airwaves.

In Brussels, where officials like to hold Ireland up as a model for other indebted countries, a spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn said such talk was unhelpful.

It is not particularly helpful at this point in time to fuel speculation about a second programme when the first one is delivering, is being implemented, Amadeu Altafaj said.

OPEN TO DISCUSSIONS

Ireland's official creditors from the ECB, the EU and the IMF started their latest quarterly review of Ireland's progress under its bailout on Tuesday.

The IMF warned last month that the prospects for a successful conclusion to Ireland's rescue package remained fragile and said Europe should consider additional support for Dublin including help on the high cost of bailing out Irish banks.

Ireland's government is trying to persuade its European partners to refinance the 47 billion euros cost of shoring up Anglo Irish Bank, recently renamed Irish Bank Resolution Corp, through cheaper loans from the euro zone's rescue fund.

An EU source said that while nothing conclusive was expected to emerge on the Anglo refinancing during the quarterly review, Dublin's plan to sell certain state assets is on the agenda and the 10-day checkup could provide an opportunity to discuss how external factors are affecting deleveraging by Irish banks.

By mentioning the weight of these external factors and their important potential impact on the process, I imply that we are open to discuss all these issues, and the current review is a privileged opportunity for that, the source said.

I cannot be more specific on the level of flexibility we have, but we are open to discussions with the Irish authorities also on the pace of this deleveraging process.

Some analysts have said the EU and the IMF should relax Irish banks' deleveraging targets to help to revive the flow of credit and breathe life into a domestic economy still reeling from the worst recession in the industrialised world.

Ireland needs assistance if it is to meaningfully reduce debt levels, especially that resulting from the banking crisis, Dermot O'Leary, chief economist at Goodbody Stockbrokers, wrote in a note.

Austerity on its own will not work, but will have to be supplemented with growth-enhancing efforts, particularly in relation to the deleveraging of the banking system.

(Additional reporting by Conor Humphries, Carmel Crimmins and Charlie Dunmore in Brussels; editing by Stephen Nisbet)