Rabbitte: We want more than bailout rate cut

THE expected reduction in the interest rate on Ireland’s EU loan will not be enough for the Government and it will fight to change other terms of the bailout, senior minister Pat Rabbitte has said.

The Government will be watching closely to see what changes Greece achieves as it seeks to ease some of the conditions of its austerity package, Mr Rabbitte said.

Greece is understood to have raised the issue of extending the time it will take to cut its government budget deficit to 3% by up to four years at a secret meeting of the bigger eurozone states in Luxembourg on Friday evening.

While a Department of Finance spokesperson said the country’s loans would be repaid in line with the terms and conditions, other government sources have been quoted as saying that Ireland would hope to follow in the wake of any changes made for Greece.

Mr Rabbitte reflected this idea when he told RTÉ, “I am interested in whether there are positive implications for Ireland over the situation that confronts Greece.”

Later the Labour party minister told the Irish Examiner: “We are seeking to renegotiate the terms and that is what we are working on... the interest rate is not the end of it, we have to alleviate the terms.” He said he did not want to be specific on what these terms were.

He questioned why the EU needs to wait until 2013 to introduce the terms of its new rescue fund, the European Stability Mechanism, which will insist that lenders suffer losses too. Under the bailout terms, Ireland’s senior bondholders are not suffering, despite a Fine Gael election promise to make them do so.

Mr Rabbitte was critical of the secretive meeting between six eurozone finance ministers including Greece, the European Commission’s Olli Rehn and the ECB president Jean-Claude Trichet, in Luxembourg on Friday night. “I am not happy with it,” he said.

Mr Rehn’s spokesperson denied it was a crisis meeting. He said that debt restructuring was not an option and reports of Greece exiting the euro were “simply wrong and intentionally misleading”.

Cutting the cost of Ireland’s loan is not on the agenda for next week’s meeting of EU finance ministers so far, though high-level discussions with country officials this week could change that.

Mr Rabbitte described the rates as “punitive” and said they must be reduced without any quid pro quo.

He added he hoped the issue would be resolved at next week’s meeting of finance ministers.

The first report from the EC/ECB/IMF team to visit Ireland last month is down for discussion by the ministers, and on foot of that they are due to approve the next tranche of the loan.

At the moment the Government is concentrating on convincing France, in particular, that giving Ireland the same terms as Greece and Portugal should not be linked to increasing the corporation tax rate. Most other countries are on board in agreeing the 1% reduction, worth about €400m.