A decision on whether or not to cut the interest rate Ireland pays for its EU-IMF rescue loan will not be taken at the two-day summit of EU leaders in Brussels beginning tomorrow, EU diplomats have said.
The issue has been parked until the results of the bank stress tests are published, a senior diplomat said.
The stress tests results are expected on 31 March.
Another senior EU source said, however, that a new loan to Ireland was a ‘possibility’ if the results of the stress tests showed a much higher amount of capital was required for the banking sector than the €10bn, or even €25bn extra in contingency funding, which was foreseen in the EU-IMF programme.
The decision was taken following intensive contacts between Dublin and Brussels in advance of the summit.
‘It's felt that due to the outstanding banking issues everything is better dealt with as a package,’ the source said.
‘There will be no push (at the summit) for agreement on the Irish issue.’
It's understood that the question of taxation at a European level, in particular the issue of the Common Consolidated Corporate Tax Base (CCCTB), remains open for discussion in connection with the Irish interest rate, but only after the results of the stress tests are known.
It is likely, however, that Taoiseach Enda Kenny will continue to make Ireland's case on the sustainability of the austerity programme and the need for a reworking of the terms of the loan when he meets EU leaders at the summit in Brussels tomorrow evening.
In particular he will stress that Ireland's austerity programme did not just begin with the EU-IMF programme, but had already started in 2008.
It will also be Mr Kenny's first opportunity to make Ireland's case before the other 26 EU leaders.
The summit on 11 March was limited to Eurozone leaders.
Once the stress tests are published EU finance ministers are expected to take immediate stock of Ireland's situation and the implications for the terms of the existing EU/IMF loan before deciding on what action to take.
