Troika asked to propose bailout extension options

Tuesday 05 March 2013 21.49
Finance Minister Michael Noonan (centre) with Spanish Finance Minister Luis De Guindos (left) before the talks last night
Finance Minister Michael Noonan (centre) with Spanish Finance Minister Luis De Guindos (left) before the talks last night

EU finance ministers meeting in Brussels have formally requested that the Troika works out "the best possible option" for Ireland with a view to extending the deadline for repaying bailout loans.

In a statement, 27 EU finance ministers formally requested the Troika of international lenders to address the issue of extending the loan maturities.

It followed a discussion on enhancing Ireland's return to borrowing on the international markets.

The same agreement was extended to the Portuguese government, which had lobbied in concert with Ireland on securing concessions on bailout terms.

The ministers said: "We discussed whether EU Finance Ministers would be ready in principle to consider an adjustment of the maturities on the EFSF and EFSM loans to Ireland and Portugal in order to smooth the debt redemption profiles of both countries."

The European Financial Stability Facility (EFSF) and the European Financial Stability Mechanism (EFSM) make up two thirds of Ireland's €67.5bn bailout.

The ministers said: "EU Finance Ministers commended the authorities' strong commitment to their respective adjustment programmes, which have already been successful in addressing previously accumulated imbalances.

"Both countries have taken successful steps to re-enter the markets. In both meetings views were exchanged on how best to support their efforts to regain full market access and successfully exit their programmes."

When Ireland was bailed out in November 2010, it received tens of billions in loans from several sources.

The sources included the newly-established EFSF and some money came from the EU's own funds.

The monies were to be paid back at different times, from as soon as three years, all the way to 29 years.

The repayment schedule has been a problem, since large chunks of debt would have to be repaid or rolled over soon after Ireland returned to the market.

The Government and Portuguese government want similar concessions.

Both are seeking to extend the maturities of these loans by an average of 15 years.

It is thought that would significantly improve Ireland's debt profile over the next ten years.

Last night, eurozone finance ministers agreed the request in principle, with the technical detail, including the length of the extensions, to be worked out by the Troika.

Government welcomes proposal

Taoiseach Enda Kenny has said it would be a good deal for the taxpayer.

Minister for Jobs, Enterprise and Innovation Richard Bruton also said a deal on postponing the European part of Ireland's bailout loans would be a boost for the taxpayer and that good progress has been made.

He said: "The basic idea is to extend the maturity of the almost €14bn loans that have been provided by Europe as part of the emergency package.

"If we get an extension of such maturity obviously you don't have to go back to the market, you get it at the rate of interest that has been fixed.

"It would be a very good deal for the taxpayer and take the pressure off having to go back to the market early to raise funds."

Tánaiste Eamon Gilmore said that a deal would be further progress on easing the burden of debt on the Irish taxpayer.

Speaking on his way into Government Buildings this morning, he said: "We've come a long way from the chaos we had two years ago to the stability we are now achieving today."

He said the Government had got a reduction in the interest rate, had dealt with the issue of the promissory note and is now dealing with an extension of the maturities.

Fianna Fáil called on the Government to seek the extension of any deal on EU money to loans from the IMF, and to bilateral loans from Britain and Sweden.

Finance spokesperson Michael McGrath said such an extension would be a benefit to Ireland.

He also called for clarity on the interest rate involved and the exact maturity of the loans.

However, Sinn Féin's finance spokesperson said the news is not unexpected and was announced in January.

Pearse Doherty said the agreement would do nothing to lift the burden from taxpayers in the short to medium term.

He said it was a "sideshow" compared to the important issue of retrospective recapitalisation of the pillar banks, which involved €30m of taxpayers' money.

Elsewhere, Minister for Finance Michael Noonan said that the next budget will be in October.

User contributions and/or comments do not, unless specifically stated, represent the views of RTÉ.ie or RTÉ. Click here for Terms of use.