Noonan says markets would welcome loan deal

Tuesday 22 January 2013 15.08
A deal on bailout loans ''has the potential to enhance the sustainability of Irish debt''
A deal on bailout loans ''has the potential to enhance the sustainability of Irish debt''

The 27 European Union finance ministers have followed their euro zone colleagues in agreeing to examine the possibility of extending the maturities for parts of Ireland's bailout loan.

The decision was taken at a meeting in Brussels this morning, which was chaired by Ireland's Michael Noonan.

However, a decision on the matter will not be taken until March at the earliest.

Mr Noonan said he believes the financial markets will welcome a deal to extend the maturities on part of Ireland's bailout loans.

Mr Noonan said the deal "has the potential to enhance the sustainability of Irish debt and, over time, cost us less in servicing the debt.''

"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," the Minister said. But he declined to put a figure on the savings.

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

Euro zone finance ministers control a bailout fund called the European Financial Stability Facility and they agreed overnight to look at extending the maturity of loans to Ireland and Portugal.

Today, all 27 EU finance ministers agreed to the same approach with the fund they collectively control - the European Financial Stability Mechanism.

Finance Minister Michael Noonan welcomed the decision saying that many of the loans given to Ireland from these two funds had very short maturities when he wanted longer ones.

Officials will now draft up a deal, in coordination with the European Commission, which finance ministers will consider in March. Only then will it be known what savings might accrue to Ireland.

European Commission Vice President Olli Rehn said that he supported the move and hoped they would now find an appropriate political and technical solution.

The Government wants similar deals with other lenders - the most urgent being securing an arrangement the European Central Bank over Anglo Irish Bank promissory notes.

Mr Noonan also repeated that Ireland would be pushing to build on the stability in the EU which had developed over the past year, to focus on growing the EU economy and to creating jobs.

Asked if the financial crisis was over, Mr Noonan said things were "far more stable than they were last year. Yet it's always ongoing work... work in progress. There are always issues which have to be dealt with but it looks much firmer going into 2013 than it did going into 2012."

Approval given for financial transaction tax

A group of 11 EU countries have been given approval to push ahead with the introduction of a financial transaction tax.

EU Tax Commissioner Algirdas Semeta told reporters after a meeting of the bloc's 27 finance ministers that the decision marked a "major milestone for EU tax policies."

The European Commission has proposed that trades in bonds and shares be taxed at 0.1% and trades in derivatives at 0.01%.

The plan is to use the revenue raised from the tax, which could run into tens of billions of euros, to prop up shaky banks.

The 11 countries backing the financial transaction tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The Netherlands, where a new government came to power last fall, might also join the bid.

It was initially hoped that the tax would be adopted by the whole of the EU however several countries, including Britain, refused to endorse it amid concerns over the measure's economic impact.

Last year's deadlock over the tax opened the possibility for a group of more than nine nations to go ahead separately using a so-called enhanced cooperation mechanism.

Michael Noonan said the decision was adopted with a qualified majority.

It "is more about process than about the make-up or the actual relevance of the financial transaction tax," he added.