Noonan: Bailout cost should be halved

THE cost of the bailout loan should be halved, Finance Minister Michael Noonan told his EU counterparts, not just for the sake of the economies in trouble, but for the good of the euro and Europe.

He criticised France and Germany for demanding an increase in the corporation tax rate, adding that neither country had moved despite recent contact. “There is a stand-off,” he said.

Mr Noonan said he put the bailout package in the European context.

“One view is that this is about Greece, Portugal and Ireland, but I said this is about the eurozone — Europe needs to have a successful programme in these countries as far as the future of the eurozone is concerned.

“If the programme is too expensive, and it is quite expensive, a failure in any of the programmes will be very bad for the eurozone and a success is not just a success for the individual country but also the eurozone, and Europe needs a win; we are having a crisis every three weeks at the moment,” Mr Noonan said.

Ireland’s average rate of interest is 5.8%, 3% of which was added as a disincentive from accessing the European Financial Stability Fund at Germany’s insistence.

This additional interest was reduced to 2% for Greece and Portugal, while non-eurozone countries Hungary, Latvia and Romania were given the funding at close to cost.

Cutting the interest rate would help all the recipient countries, Mr Noonan said, pointing out that at the same time as money was raised on the markets for Ireland, it was also raised for non-eurozone countries with market problems.

He said it was ironic that some of the money raised in the bond sale for Ireland went to non-euro states but at half the price that Ireland was charged.

Mr Noonan added that while Ireland insists it should have the same rate as Portugal, it also contends the rate is too high.

“You can enhance the chances of success of the programme if you reduce the pricing. A lot of colleagues agreed with that.”

Other countries said they signed off on the Irish arrangement and a concession to Germany on the interest rate, with the intention that it would apply to Ireland also, he said.

France and Germany were not saying that the 27 EU member states should change the situation where tax is a matter only for national governments, but they wanted a bilateral agreement from Ireland to change corporation tax.


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