A breakthrough agreement extending the loan period from seven-and-a- half years to 21 years is on the table, as well as a new facility to buy back the country’s existing debt, Government sources have told the Irish Examiner.
While such moves would not impact on the next two austerity budgets, they would be expected to give the Exchequer an extra €1bn per year from 2014.
The deal would be part of a eurozone-wide move to pull the EU back from the brink of another major financial crisis, as fiscal contagion spreads from small peripheral economies like Ireland and Greece to major economies such as Italy.
The debt buy-back facility would allow Ireland to purchase some of the country’s outstanding debts on the international markets at knock-down prices, so easing pressure on the state’s finances. Movement on the long-running battle to cut Ireland’s heavy interest rates on the €68bn worth of loans it was forced to take out, is also likely, sources confirmed.
Taoiseach Enda Kenny has been deliberately down- playing expectations ahead of the crisis summit. But ministers have been pushing hard for Ireland to be given what they call a “turning point” opportunity as part of the wider settlement intended to calm the markets.
Tripling the period Ireland has to pay back its debts will be a major boon to the Department of Finance as it faces into another harsh budget which is expected to see €4bn in cuts and tax hikes in December.
Finance Minister Michael Noonan expressed mild optimism that progress could be made on getting a deal cutting Ireland’s interest rates on its emergency bailout loans, but dampened hopes of a wider deal.
He said that while the main focus of the Brussels summit is a potential second bailout for Greece, he believed that Ireland would also be on the agenda.