EC chief Barroso backs Irish bid on rate cut
Published 22/06/2011 | 05:00
EUROPEAN Commission chief Jose Manuel Barroso has publicly backed Ireland's bid to get a cut in the interest rate charged for the EU bailout loans.
The commission president said the Irish interest rate was too high. The comments add to the pressure on French president Nicolas Sarkozy to drop his veto of the rate cut, even though cutting the interest rate is not on the agenda for a European leaders' summit being held this week.
"The position of the commission is that we believe there should be a reduction of the interest rate paid by Ireland, also for the credibility of the bailout programme," Mr Barroso said.
He made the comments at a press conference in Brussels yesterday.
The IMF has already backed a reduction in the interest European institutions are charging Ireland for €45bn of the €67.5bn international rescue loans.
Mr Barroso said lowering the interest being charged on the loans would make Ireland's government debt more sustainable.
The Government regards Mr Sarkozy as the final obstacle to securing a 1pc cut in the approximately 6pc being charged for the loans. Irish ministers think paying such high interest makes it harder to grow the economy out of the crisis.
The French president wants a rate cut to be conditional on Ireland raising the 12.5pc corporation tax.
Ministers are pushing the issue in an effort to soften the French stance.
On Monday, Michael Noonan raised the issue with French finance minister Christine Lagarde at the margins of today's finance ministers' meeting. Tanaiste Eamon Gilmore has raised the issue with his French and German counterparts.
Government sources said individual French ministers, and the German government, have shifted on the issue, leaving Mr Sarkozy the final obstacle to securing the cut.
Yesterday, Taoiseach Enda Kenny defended Michael Noonan's decision not to warn the European Central Bank of a plan to force losses on senior bondholders in Anglo Irish Bank and Irish Nationwide.
In the Dail the Taoiseach said the comments were in keeping with Fine Gael policy.