EC debt-burden proposals 'could save Ireland billions'

Ireland is set to save billions of euro on the repayments it makes on its bailout loans from Europe.

The European Commission is proposing that the yield on the rate it charges for loans under the European Financial Stability Mechanism - or EFSM - be cut from 2.9% to zero.

The move - which is set to be approved in the next few weeks - is also being backdated to the time when Ireland first received its bailout.

Newstalk business editor Ian Guidar said the savings could run into billions of euro over the lifetime of the bailout deal.

"This is fantastic news for the country (with) a further reduction in the amount of interest we have to pay back on the bailout package," he said.

"At a minimum, we (will) save €650m a year in interest savings. It could save us billions of euro over the lifetime of the agreement.

"The other good news is that we don't have to pay back all the bailout money all at once - we can extend it out over 12 years, so hopefully that will mean that over future Budgets, the pain won't be as bad as the Government has a bit of money to play around with."