Ireland favours ‘common bonds’

IRELAND would like to see the eurozone issue common bonds as part of the solution to the bloc’s debt crisis, the Tánaiste said yesterday.

“It is an option I favour. It is one of a series of options that have to be looked at,” Eamon Gilmore told RTÉ.

Eurozone leaders will meet in Brussels on Thursday to discuss ways of halting the threat of contagion to Italy and Spain from Greece’s rumbling debt crisis.

Mr Gilmore said it was to Ireland’s advantage that European leaders were now looking at the crisis as a eurozone problem rather than an issue for individual countries.

“I believe that will work to Ireland’s advantage because solving the European problem will help solve the Irish problem,” he said.

Ireland hopes a new plan to tackle the crisis will mean the terms of its own €85 billion EU-IMF bailout package will be loosened, including a cut in the average 5.8% interest rate on its European loans and longer loan maturities.

Eurozone finance ministers agreed last week to make the European Financial Stability Fund (EFSF), the eurozone’s rescue fund, more flexible, but the details have yet to be worked out.

In an opinion piece in the Sunday Business Post, Olli Rehn, Europe’s top economics official, said the interest on Ireland’s loans should be cut and the maturity of the debt lengthened.

Mr Gilmore reiterated the Government would not raise its 12.5% corporation tax rate in return for a cut in the cost of its rescue funds.

“I don’t think there is any government in Europe that now believes Ireland will change its rate of corporation tax.”

Credit rating agency Moody’s junked Ireland’s sovereign debt rating last week on concerns a second bailout for Dublin would involve private investors swallowing losses.

But the European Commission’s country director for Ireland said last week that if Dublin needed a second bailout it could be achieved without private-sector participation because, unlike Greece, the Irish debt was manageable.