€9bn less to be spent on banks

THE Government expects to spend some €9 billion less than originally forecast on propping up Ireland’s troubled banks, Finance Minister Michael Noonan said.

Objections by France and Germany were the main reasons blocking Ireland from achieving a cut on the interest rate on the country’s EU loans, the minister added.

Speaking as EU leaders met in Brussels to discuss the euro crisis, he said Ireland would rather continue paying a higher interest rate than give up our treasured corporate tax rate.

Speaking in Dublin to employers group IBEC, Mr Noonan outlined key savings being made on recapitalising Irish banks.

The Government had originally said in March that €24bn would need to be spent on replenishing the banks’ balance sheets.

But Mr Noonan yesterday outlined how funds from burning subordinate bondholders, bank asset sales and private investment would reduce the amount by €6bn.

The government also does not expect to rely on spending a €3bn contingency fund when recapitalising the banks, with any savings on rescuing the banks instead going to driving down Ireland’s debt.

The government is hoping such measures, along with better than expected gross domestic product (GDP) data will decouple Ireland from Greece in the minds of investors.

“We are thinking of printing t-shirts in the Department of Finance, they won’t be given out free, they will be for sale of course, saying ‘Ireland is not Greece’ ... across the front and back of them,” Noonan said.

Mr Noonan said: “There’s a lot of money left over on the banking side. And we’ve already got agreement from our partners in Europe that this can be transferred to the other side of the equation and give us a longer round for adjusting our deficit figures as we go forward.”

Mr Noonan reiterated the point that Ireland’s low corporation tax rate was “non-negotiable”, despite demands from France in exchange for supporting a lower bailout interest rate.

“If the price of an interest rate reduction is a change in our corporate tax regime, then we’ll pay the higher interest rate. We are quite prepared to make concessions elsewhere in the [bailout] programme.”

He said the low corporate tax rate was at the heart of Ireland’s recovery as it contributed towards a strong exports industry.

“Until there’s a move there, this won’t be resolved because we are not moving on corporation tax,” he said.

Stressing the need for EU states to recognise Ireland’s financial position was improving, Mr Noonan joked that his department were going to mass produce shirts saying Ireland was neither Greece nor Portugal.

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