Cut to interest rate on €85bn bailout due in June

A CUT in the interest rate owed on the €85 billion EU/IMF bailout is expected to be granted in June, according to sources in both Dublin and Brussels.

But it may not apply until after the next instalment of the loan, worth €8.4bn, is paid, meaning this and the €5bn already received will be subject to a higher rate.

Officials from the EU, the IMF and the European Central Bank arrived in Dublin yesterday to examine the state’s finances and make sure the Government is keeping its side of the bailout deal agreed last November.

It had been anticipated that finance ministers meeting in Budapest this weekend would agree to reducing the rate from 5.8% to 4.8%, saving Ireland €450 million a year.

But a Government spokesperson said: “Finality is expected possibly in June. But we don’t expect it this weekend.”

European Commission sources confirmed Ireland would automatically be granted the reduction in June without a quid pro quo, such as a change in the corporation tax as the programme is already fixed.

“We would like to see a lower interest rate for Ireland to make the debt more sustainable,” a source said. “The new pricing mechanism for the European Financial Stability Fund from which Ireland has borrowed has been agreed by EU leaders but needs to be approved by the national parliaments.

“This should happen by June though it might be later. It would be applied to any further loans for Ireland,” the source said.