EU ministers agree to examine terms of Ireland's bailout loan

Tuesday 22 January 2013 23.12
Michael Noonan and Italian Finance Minister Vittorio Grilli chat before this morning's meeting
Michael Noonan and Italian Finance Minister Vittorio Grilli chat before this morning's meeting

EU finance ministers have agreed to examine the possibility of extending the maturities - the time allowed for repayment - for part of Ireland's bailout loan.

The decision was taken by the 27 ministers at a meeting in Brussels this morning.

It follows a similar decision by eurozone finance ministers last night.

Today's decision relates to loans secured from the EFSM, whereas the earlier decision related to money from the EFSF.

Finance Minister Michael Noonan, who chaired today's meeting, said many of these loans had short maturities and the aim of Ireland and Portugal was to replace them with longer ones.

Officials will now look at a plan, in coordination with the European Commission, and report back in March.

European Commission Vice President Olli Rehn said that he supported the deal in principle, adding that he hoped they would now find an appropriate political and technical solution.

The Government hopes to conclude similar deals with other lenders.

The most urgent will be to secure an arrangement with the European Central Bank over promissory notes.

Earlier, Mr Noonan said the financial markets would welcome a deal to extend the maturities on part of Ireland's bailout loans.

Speaking before this morning's meeting, he said the deal "has the potential to enhance the sustainability of Irish debt and, over time, cost us less in servicing the debt".

While he declined to put a figure on those savings, he said: "The savings on the debt servicing will make the debt position more sustainable and increase the willingness of the markets to lend to us at low interest rates."

Asked if the markets might consider such a move a partial default, Mr Noonan added: "There's no default in this, we will pay for this down to the last euro.

"Lengthening maturities would be seen as normal practice by the markets. I have no doubt at all that, if we succeed in getting this, the markets will welcome this."

Elsewhere, Tánaiste and Minister for Foreign Affairs Eamon Gilmore welcomed last night's agreement.

Speaking on his way into Cabinet, Mr Gilmore said: "This was something that is important in terms of reducing the cost of borrowing for Ireland from the EFSF and the EFSM."

The Tánaiste said that it was one of a number of measures that Ireland is seeking to conclude to reduce the debt burden on the Irish taxpayer.

Mr Gilmore said that the Government was at a "critical stage" of discussions with the ECB on the Anglo Irish Bank promissory note.

"Time is running out for on the period we have to conclude those discussions," he said.

Minister of State at the Department of Finance Brian Hayes said that the broad consensus of support at EU level is "potentially very significant" in terms of Ireland's return to the markets.

Cautious welcome

Opposition parties have given a cautious welcome to the news, but say it does not go nearly far enough.

Fianna Fáil Finance Spokesperson Michael McGrath said an extension of maturity was one of a number of concessions Ireland would need in order to return to the markets - but it had actually been agreed 18 months ago, and nothing had happened since.

He said they would use this afternoon's Dáil debate on a new loan deal for Greece to ask the Government to look for similar terms for our debt.

Sinn Féin's Pearse Doherty said the maturity issue was a "sideshow" to the real issue, which was legacy bank debt.

He said any benefit from the Brussels agreement would be far out in the future, and it would not save one red cent during this Government's term.

Independent TD Stephen Donnelly said the first tranche of funding to which this would apply had to be repaid in 2016.

He said if, as is hoped, Ireland is back in the markets by then, an extension of maturity would make no difference.

He said what is needed is for everyone in Europe to take responsibility for propping up the eurozone when it was very vulnerable.

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