Warning from EC on changes to aid package
But in a note of encouragement, Economics Commissioner Olli Rehn said the country’s massive public debt was sustainable, provided the programme measures were implemented and growth was as forecast by the EU and the IMF.
On the question of reducing the 5.8% interest on the loan, he said that while the Commission supported a cut, it depended on the EU states agreeing the comprehensive package at the March 24 summit.
Mr Rehn, replying to questions from three Irish MEPs in the European Parliament, reminded them that the Commission had repeatedly warned the Government about the dangers of the property boom as early as 2000.
He believed the policy path set out in the programme is the right one to ensure success.
Since the budgetary measures for the years beyond 2011 have not been negotiated in detail yet, the incoming government could negotiate for particular measures to be varied.
Fine Gael MEP Jim Higgins said that while he appreciated the main elements of the programme would remain in place, he said he felt there were other elements “that could be renegotiated and will improve the country’s ability to repay”. He insisted the EU had to take some of the blame for failing to supervise the banks adequately.
Dublin MEP Gay Mitchell told the Commissioner that a cut in the interest rate would help economic growth in the country.
Labour MEP Proinsias De Rossa told Mr Rehn and Commission president Jose Manuel Barroso the new Government had a strong mandate to renegotiate the EU-IMF loan package.
“The EU-IMF bailout has failed to restore confidence in the Irish economy. The uncertainty over the affordability of the rescue package lies at the root of that failure and that in turn is contributing to the wider eurozone financial instability,” he said.
The package will be discussed at a summit of eurozone leaders in Brussels on Friday, which will be attended by the incoming Taoiseach Enda Kenny.
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