Bailout rate cut delayed by a month

IRELAND will almost certainly have to wait at least another month before getting a cut in the interest rate it pays on its EU/IMF loan, according to EU and government sources.

There was some optimism that finance ministers at an informal meeting in Budapest later this week would give political agreement to reduce the rate from 5.8% to 4.8%, saving the country €450 million a year.

However, an ill-tempered election in Finland where the eurosceptic anti-bailout party, the True Finns, are threatening the government parties, means they will be unwilling and unable to make any concessions.

Germany is also unlikely to make any public move towards Ireland with media being quite hostile to the Irish loan and France shows no signs of letting up on demands for an increase in the Irish corporation tax rate.

Even the cut in the interest rate to Greece, which they won in exchange for agreeing to sell off €50 billion worth of state assets, has still not been firmly tied down, according to sources.

Finance Minister Michael Noonan will brief his fellow ministers on the bank stress tests and restructuring plan.

A Department of Finance spokesperson said: “We will have to wait and see how the meeting develops, but we do not expect much as this is just a two-hour long meeting.”

The next full EU finance ministers meeting will be on May 16/17.

Today, a team from the troika — the European Commission, the ECB and the IMF — will visit Dublin to carry out the first of the quarterly reviews, agreed on foot of the €67.5bn bailout.

Over the next 10 days they will review the progress on GDP growth, exports and tax revenue based on the latest figures and see if any adjustments need to be made to targets for the year to cut the Government deficit.

They will also discuss with the Government any changes they wish to make such as restoring €1 to the hourly minimum wage which the Government promised during the election campaign.

“They can make minor changes as long as they compensate for any loss of revenue through taking alternative action,” said a senior EU source.

The troika will also consider the bank restructuring plan and the next stage in winding down Anglo Irish Bank, due in May.

Greece will also be on the agenda for the finance ministers from the 17 eurozone countries and, in particular, problems with the implementation of reforms that the Greek parliament has agreed but which have not yet been carried out.

The Greek’s next and fourth review will begin on April 15. “The decision may be to get tougher with them” said a source. This could mean threatening not to release the next tranche of the Greek’s loan.