IRELAND’S focus remains firmly on getting a cut in the interest rate on its bailout, Finance Minister Michael Noonan said as eurozone ministers agreed the details of a €78 billion loan for Portugal at a lower rate of interest.
Ireland was “hitting all the targets” of its loan programme Mr Noonan said as the Troika — European Commission, ECB and IMF — gave the thumbs up to the country’s progress following its recent mission to Dublin.
The next tranche of the loan will now be available but the Government is seeking to push out the schedule and not draw down the money just yet, preferring to spend what it has put aside from the pension fund and its own resources first.
The meeting took place in Brussels against the backdrop of IMF head Dominique Strauss-Kahn’s arrest on sexual assault charges in New York.
He was due to attend yesterday’s meeting to advise on the Greek programme which he was involved with from the start. The IMF contributes a third to the Greek package, as it does to the Irish and Portuguese loans.
Many of the ministers also supported Italy’s Mario Draghi to take over the helm at the ECB from Jean-Claude Trichet in November. Mr Noonan, when asked about “Super Mario”, said: “We do not see any other candidate emerging at the moment”.
The Portuguese loan is over the same length of time as Ireland’s but the additional rate of interest charged is 2% rather than the 3% agreed with Dublin. Irish sources said that since Portugal was not asked for anything additional in exchange for the lower rate, it strengthened Ireland’s case.
However, Paris continues to demand that Ireland’s corporation tax rate is increased — something the Government has ruled out, saying it will not swap this for a cut in the interest rate.
The Government is also watching closely any changes made to the Greek bailout, such as extending the term of the loans.
Greece is looking for changes, arguing it would improve its ability to deal with its €330bn debt. In March, Greece required more time to repay loans and is now asking for another extension and possibly more money.
Ministers were yesterday for the first time talking openly of restructuring, rescheduling or reprofiling the debt. Dutch Finance Minister Jan Kees de Jager said, “Of course we discuss all kinds of topics, including restructuring, but in public we are very reluctant to discuss or debate restructuring”.
Germany insists that restructuring is not legally possible as it would mean the ECB and the EU being forced to accept a loss on their loans to the country. They also want to see faster privatisation of €50bn of Greek state-owned assets.
Austrian minister, Maria Fekter, said Austria favoured rescheduling the loan by extending the repayment period. German Minister Wolfgang Schaeuble said at the weekend Germany could agree to this if private creditors did so also.
European Commission spokesperson Amadeu Altafaj said restructuring was not an option and warned of its effect on the common currency. “We consider it would be devastating, not just for Greece but beyond Greece also and we are prepared to do everything necessary to preserve the stability of the euro area”.
A Troika mission is currently in Athens examining what progress is being made in cutting deficits and restructuring the country’s economy. A decision on the next instalment of €12bn will not be made until June after the Troika report.
But many expect that any decision to reschedule or grant them more money would not be made until later in the year.
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