EUROPE has given Ireland the go-ahead to delay repaying billions of euro worth of loans, in a move that could dramatically improve the country's finances over the next decade.
EU finance ministers agreed in principle to extend the maturity dates on as much as €40bn worth of credit that was given to us as part of our international bailout, potentially easing the pressure on future budgets.
In a statement after their meeting in Brussels yesterday, ministers from the 27 EU states said they had discussed whether they would be ready "in principle to consider an adjustment of the maturities on the loans to Ireland and Portugal in order to smooth the debt redemption profiles of both countries".
"We agreed to ask the troika of the EU, European Central Bank and International Monetary Fund to come forward with a proposal for their best possible option for . . . these two countries for the loans," the ministers added.
The troika is expected to present its proposal at an informal meeting of ministers in Dublin next month.
The EU's economics chief Ollie Rehn said he was "very pleased with the agreement" and said the European Commission would "work hard to facilitate a decision on a measure that will send a strong signal of confidence in both countries in April".
When Ireland was bailed out in 2010, the EU agreed to provide €40.2bn in emergency financing.
Those loans came from two funds – the European Financial Stability Facility and European Financial Stability Mechanism – and have been given to us in tranches since then.
So far about €34bn of it has been doled out, tied to various repayment dates. About €10.5bn is due to be handed back between 2015 and 2016 alone.
Combined with regular bond repayments, at the moment the Government has debts of more than €30bn due over those two years.
Most analysts agree that this is far too high for the country to manage without assistance.
Analysts at Davy Stockbrokers said an extension on even just those loans would "likely smooth a substantial hump in Ireland's funding requirements".
Details of the plan have yet to be worked out, but there are believed to be several options on the table:
• The loans could be ex- tended by more than five years.
• The loans could be extended by between two-and-a-half and five years.
• The loans could be "re-profiled" so that more of them come due later without increasing the average maturity date overall.
• Or the troika could recommend that no changes be made, although that is considered unlikely.
Before Tuesday's meeting began, Finance Minister Michael Noonan said the Government was negotiating to find a middle ground within this framework.
Ireland's loans currently have an average maturity of 12-and-a-half years. Mr Noonan wants that to be increased to 15 but fears there is no significant "appetite" for that size of an increase.
Any agreement is likely to echo last month's promissory notes deal. While there will not be an actual reduction in the amount Ireland will have to repay overall, by extending the maturity dates, the Government will not have to find so much money in the short term.
There is believed to be strong support within EU governments and the troika to give Ireland and Portugal some sort of relief on their loan repayments.
However, some states may have to have the changes ratified by their parliaments for it to go through.
After yesterday's meeting Mr Rehn said it was in "every EU members' interest that Ireland and Portugal can return fully to the markets".