Barroso says Ireland will get interest rate discount
Published 06/04/2011 | 05:00
EU Commission chief Jose Manuel Barroso has said that Ireland will get a discount on the interest rate it pays on €40bn of EU loans.
Speaking to MEPs during a debate in Strasbourg yesterday, he said it was "fair" that Ireland should get the same cut as Greece, which saw its interest burden fall by 1pc last month.
"We can't impose costs which are very, very difficult for our Greek or Irish citizens to pay, but we also have to look at the substance of the debt and how it is to be managed," he said.
EU sources have indicated that it is unlikely a rate decision will be made when finance ministers meet in Budapest this week.
It is expected that Finance Minister Michael Noonan will raise the issue at the talks, but sources say that electoral constraints in Finland and Germany together with French insistence on linking a rate cut to an increase in Ireland's 12.5pc corporate tax will leave Mr Noonan three votes short of the unanimous backing he needs to secure a concession.
A further round of talks in May is expected to yield better results, although Labour MEP Proinsias De Rossa says he does not expect the corporate tax issue to be dropped before the French presidential poll in 2012, as it is being used for "domestic consumption".
He said that there was a major misunderstanding in some European countries about the terms of the bailout.
"The fact is they are loaning us money on which we are paying interest -- they are making money out of our problems. It is incomprehensible that any major country would expect Ireland to destroy its industrial base to qualify for a 1pc reduction in the interest rate."
He made the comments after he and Ireland's other 11 sitting MEPs met economics chief Olli Rehn to press him on the precarious financial position.
FG MEP Sean Kelly told Mr Rehn the 3pc premium being charged on Irish loans was illegal given that bailouts agreed in 2009 for Latvia, Romania and Hungary had no extra fee.
Senior UK MEP Sharon Bowles has asked Mr Barroso to repatriate any profits made on the bailout to the Irish Government. "These rescue mechanisms are not for money- making, especially when there is self-interest beyond eurozone stability, such as several member states' banks being supported now by Irish taxpayers."
FG MEP Gay Mitchell said Irish taxpayers could not afford to sustain both the banks and the wider economy unless the ECB offered us more security.
He suggested the ECB become a shareholder in the Irish banking system, given its unwillingness to countenance haircuts for senior bondholders.