Central Bank Governor Patrick Honohan has rejected suggestions that he miscalculated the scale of Irish bank losses.

He was responding to an article in yesterday's Irish Times by leading economist and UCD Professor Morgan Kelly who argued that Ireland's future depends on breaking free from the bailout.

Mr Honohan said there were a number of errors in the way Prof Kelly calculated his figures and he also defended his interview with RTÉ's Morning Ireland programme last November, where he spoke about the bailout.

He said silence on his part would have been wrong.

Mr Honohan said he sought legal advice and there was no way the Government could have walked away from the bank guarantee.

Mr Honohan also said the growth of Ireland's debt is a serious problem and needs to be managed in discussion and negotiation with our European partners.

He said we are experiencing a very severe recession with a low growth scenario and we must find every means to move away from that.

He described our current position as a holding operation, and that Ireland still had ‘a number of cards to play’ in its negotiations with the EU and IMF.

Bailout rate must be reduced - Rabbitte

Minister for Communications, Energy and Natural Resources Pat Rabbitte has said that the Government is absolutely satisfied that the existing interest rate on the EU/IMF bailout is punitive and must be reduced.

Mr Rabbitte said the interest rate must be brought down without anything given in return.

He said the Government had been constantly involved in talks on the interest rate issue, and that he hoped the issue would be resolved at the EcoFin meeting on the 16-17 May.