German Chancellor Angela Merkel said the question of what might be done to improve the sustainability of Irish sovereign debt is to be determined by eurozone finance ministers.

She was speaking after a meeting with Taoiseach Enda Kenny in Berlin.

Chancellor Merkel said "we have to wait and see" the outcome of the talks but work is being carried out to look at specific Irish questions.

She described Ireland as "a shining example" of how the EU will emerge from this crisis "stronger than when it went in".

The Taoiseach said Ms Merkel had re-affirmed that Ireland is a special case in the Eurogroup of finance ministers.

He said Ireland was seeking to return to private debt markets in a durable fashion once the bailout programme ends.

Mr Kenny said that the more clarity on how it would emerge would be helpful.

He said Ireland's priorities in its Presidency of the EU in the new year will be to focus attention on financial stability, and to promote jobs and economic growth.

The EU is looking at how the new bailout fund, the ESM, can be used to deal with banking industry problems in the eurozone.

The German government and its opposition leader have already ruled out using the fund for retrospective bank recapitalisations.

Ireland argues that it is a special case, as it has already recapitalised its banks using borrowed money.

Chancellor Merkel and her Finance Minister Wolfgang Schaeuble have declared Ireland to be a special case, to be considered separately from the other eurozone banking problems.

Ms Merkel denied austerity was the only policy being implemented to correct national finances in most European states.

She said: "I think it would not be doing justice to say it’s only about austerity policies. Look at what Ireland is doing in terms of structural reforms, such as labour market changes to enable young people to get jobs.

"Structural reforms are at least as important - if not more so - than fiscal consolidation."

Meanwhile, the deputy leader of Ms Merkel's CDU party said Germany would do "its very best" to help Ireland get a deal on its bank debt.

Speaking on RTÉ’s News at One, Dr Michael Fuchs said he had to congratulate the Irish people for doing "the best job" on working for economic recovery.

Asked whether Ireland should get relief on its debt, he said: "We all admire that Ireland is doing its very best, faster than anyone else in Europe.

"On the other hand, of course, everybody has to do their own work because we want to have the euro stable and safe, and everybody has to work on that."

He pointed out that interest rates were going down for Irish bonds, which indicated that Ireland was again becoming "prosperous", compared to the other countries in bailout programmes.