A well-placed Brussels diplomat has told RTÉ News that it is unlikely that the interest rates being paid by Ireland for the €85 billion rescue fund can be lowered.
The comments come amid speculation that the interest rates which apply to the EU IMF rescue mechanism may be discussed at a meeting of euro zone finance ministers on Monday.
They also follow comments from French President Nicolas Sarkozy who said that Ireland should not be allowed to benefit from European Union aid while maintaining its low company taxes.
While there is a possibility that the interest rates on the bail-out will be discussed on Monday, the diplomat played down suggestions that they could be lowered.
The Irish bail-out is sourced from three separate funds amounting to €22.5 billion euro each - the European Financial Stability Mechanism (EFSM), the European Financial Stability Facility (EFSF) and the International Monetary Fund (IMF).
Lowering the interest rate would have negative implications for the cash reserves of the EFSF component of the bail-out, would blunt the emphasis on the facility being an absolute 'last resort', and would increase moral hazard, the source said.
The EFSF is the Luxembourg-based facility through which cash is raised on the international markets, based on guarantees provided by all 27 member states.
The overall costs, or interest rate, that Ireland has to pay for the EFSF component of the loan are around 6%. There was criticism by opposition parties in December of the interest rate charged for the EFSM component of the Irish bail-out.
The EFSM is effectively EU money - the European Commission can raise up to €60 billion on the international markets to lend on to Ireland. But the Commission charges Ireland a margin of 2.925% above the rate at which Brussels borrows the money.
The margin was a political decision taken by EU finance ministers, including Brian Lenihan, when the overall €750 billion rescue fund was agreed following the Greek debt crisis last May.
It was designed, again, to dissuade member states from looking to the fund for help at rates lower than those applied in the open market. However, the margin raised eyebrows when it emerged that it was the first time the European Union ever charged a profit margin for money that it was lending or guaranteeing.
If Ireland drew down all of the €22.5 billion under the EFSM component, the margin could cost Ireland nearly €5 billion over a seven year period.
That money would go back to the EU budget as surplus - and therefore it would revert proportionately to EU member states on the basis of their contribution to the EU budget.
Ireland can't take aid, keep low tax - Sarkozy
Ireland should not be allowed to benefit from European Union aid while maintaining its low company taxes, French President Nicolas Sarkozy said today.
'I deeply respect the independence of our Irish friends and we have done everything to help them. But they cannot continue to ask us to come and help them while keeping a tax on company profits that is half what other countries have,' he said.
Ireland requested an €85 billion bailout from the EU authorities and the International Monetary Fund late last year.
Our low corporation tax rates - at 12.5% - are often criticised by other governments in the euro zone.
The French President also said that the euro is still too strong against the dollar and the exchange rate is hurting French and European exports.
'Today it's better because we are at a euro-dollar rate of €1.29-1.30, but it is still too much,' he told workers at a plant of the plane-maker Airbus in southwestern France.
Sarkozy said that as the current president of the Group of 20 and Group of 8 powers, France wants to reform currency and commodity markets and world governance. He also vowed that he would not allow the euro to collapse.
His comments came amid investor unease that the debt crisis that forced multi-billion-euro bailouts of Greece and Ireland last year may spread to Portugal and even to bigger economies such as Spain, Belgium and Italy.