Eurozone ministers and their experts were involved in intense negotiations and number crunching last night to work out a way to reduce the amount of money Greece will owe in 2020.
Finance Minister Michael Noonan insisted any debt decrease Greece gets will not apply to Ireland. “The package that is being discussed won’t be applicable to Ireland. This is a special and particular case. There is no crossover into Ireland’s affairs.”
The IMF has threatened to pull out of the Greek rescue deal, where they are responsible for contributing about €50bn of a total €246bn loan to the deeply cash-strapped state.
There had been a proposal for the ECB to forgo profits on the Greek bonds they bought under the Security Markets Programme. There appeared to be general agreement to this, including by Ireland, that would forfeit their share of the profit that would be returned to the member states.
Also under discussion was a plan to cut the 1.5% added to the interest rate Greece pays for bilateral loans it received from other EU states when it first needed a bailout. Mr Noonan said Ireland and Portugal, both programme countries, would be exempt and would receive the full amount.
However reports said these savings had only notionally got the debt down to 128% by 2020, and other ways were needed to reduce it from the forecast 144%.
While the IMF chief Christine Lagarde has been insistent that the eurozone needs to consider a debt write-off of some of the loans given to Greece, Germany and some of the other countries are refusing to consider this. “We need a solution that is credible for Greece — that is what is important”, she said as she arrived for the meeting in Brussels yesterday.
Ms Lagarde last week insisted the IMF’s rules must be adhered to and the debt reduced to sustainable levels before they could continue to commit to it. She refused to agree to the eurozone ministers to push out the date further to achieve the percentage.
She met with the ministers of Germany, France, Spain and Italy last week and all appeared to agree to a substantial cut in the interest rate for bilateral loans,
However at the eurozone meeting the following day, Germany appeared to retreat, and it was left to technical experts to try find new methods and figures. Ministers held a conference call on Saturday to agree new measures. It was thought they had, but afterwards Germany appeared to retreat and so yesterday’s meeting was again considering a range of mini-measures to cut the debt.
They also need to find an extra €32bn to bridge the gap between 2014 and 2016 following agreement to extend the date when budget targets are to be met. In the meantime, Greece is waiting to receive a total of €44bn, most of it held up for months.
Meanwhile, the European Court of Justice will rule this morning on the case brought by the independent Donegal TD Thomas Pringle challenging the European Stability Fund. This is seen as the final hurdle for the EU’s €500bn rescue fund which was approved by each member state during the year, including Ireland through a referendum.
Mr Pringle argues that the ESM breaches the no-bailout clause in the EU’s treaties. All 27 judges of the court have been working on the case for more than three months in a fast-track procedure.
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