The Austrian Finance Minister has called on the Irish Government to offer something in return for securing a lower interest rate on the bail-out.
'If Ireland wants to change what we have already adopted, on the interest rates for example, it's up to the new government to make a new proposal', Josef Proell said. He made his comments after the conclusion of a meeting of EU finance ministers.
'They can send a signal to Europe, like the Greek government for example. They've got a longer time to pay the loan back, but on the other hand they proposed to privatise a lot of enterprises worth €50 billion,' he said.
Mr Proell said euro zone finance ministers were waiting for proposals but it was not up to him or other ministers to provide ideas or proposals. He said he was optimistic something could be agreed between both sides.
When asked if Ireland should compromise on the corporate tax base issue, he said 'that may be a way out, but it's not up to me to give them a proposal. They should make a proposal and then we can start the negotiation.'
Earlier, all 27 finance ministers proposed six new laws aimed at tightening budget discipline and punishing governments that overspend to prevent a new debt crisis.
New financial sanctions would be introduced for the 17 euro zone states and 'these would apply earlier on in the excessive deficit procedure,' an existing name-and-shame regime, a statement said.
Fines, which would initially take the form of returnable deposits where corrective action is taken as ordered by Brussels, would ultimately be transferred into the EU's financial rescue funds.
However, European Central Bank president Jean-Claude Trichet said the ministers could have gone further.
While stiffer punishment kicks in for annual deficits that fail to remain within a 3% of GDP threshold, cumulative national debt would for the first time also be punished if it does not move quickly enough towards a debt to GDP limit of 60%.
However, states will have three years to reduce the gap above the threshold by an average of one-20th per year and may also escape punishment when taking into account 'other relevant factors, such as implicit liabilities related to private-sector debt and ageing cost.'
ECB group to have talks on banks
Earlier, Finance Minister Michael Noonan has said that the €10 billion earmarked in the EU-IMF programme for recapitalising the banks will probably not be enough.
He added that bank stress tests could reveal a capital shortfall which - alongside the sovereign debt - could lead to a situation where sustainability was 'doubtful'.
On the margins of meetings of EU and euro zone finance ministers in Brussels yesterday, Mr Noonan said he sought assistance from Jean-Claude Trichet, president of the ECB, to help with a potential shortfall in both the liquidity and capital situations in the banking sector.
Mr Noonan told reporters that he sensed a 'willingness to help' by his euro zone partners and the ECB, and said that an ECB delegation would be in Dublin on Wednesday for talks with the Department of Finance.
He expected the shortfall to be revealed by the results of bank stress tests which will be published by the end of March.
The Government is seeking a medium-term solution from the ECB in order to end a process of fortnightly injections of emergency liquidity to Irish banks.
It also wants the restructuring of the banking sector to be carefully paced so the capital position of the banks will not be undermined in a firesale situation. 'We need a longer deleveraging period,' he said.
Mr Noonan criticised the outgoing government for its decision not to inject the €10 billion set aside in the EU IMF programme to recapitalise the banks. At the time the outgoing Finance Minister Brian Lenihan said he did not have a mandate to do this as an election campaign was underway. Mr Noonan claimed it was not done because the previous administration 'knew it wasn't enough'.
He also said Ireland's negotiating position on securing a lower interest rate on the bail-out was made more difficult by the potential problems arising from the bank stress tests, and he said the tests should have been done much earlier by the previous government.
When asked if his former colleague John Bruton had made Ireland's position difficult by his criticism last week of the ECB's role in supervising the banking sector during the boom, Mr Noonan said that the former Taoiseach and EU ambassador to the EU was an 'experienced public person' but he was 'not acting on behalf of the government. This was his own personal view.'
The minister again rejected any notion that Ireland would alter its low corporate tax rate as a quid pro quo for an interest rate reduction, and he also said that moves towards a common consolidate corporate tax base were 'out'.
Following the heads of government of the euro zone agreement on Friday to make the €440 billion rescue fund (EFSF) bigger and more flexible, Mr Noonan said it would be helpful if the new status of the fund allowed it to buy government bonds. 'The NTMA could sell some bonds on the market, and others to the fund, so it would become a kind of underwriting agency to help Ireland get back to the market,' Mr Noonan said.
