Business Irish

Saturday 23 August 2014

Kenny vows to get Anglo concession after Greek deal

Thomas Molloy and Fionnan Sheahan

Published 28/11/2012 | 05:00

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IRELAND does not expect to benefit from the deal to reduce Greek debt but remains determined to find a mechanism to avoid paying €3bn due in four months for bailing out Anglo Irish Bank, Taoiseach Enda Kenny said yesterday.

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"It is the intention of the Minister for Finance, on behalf of the Government, not to have to pay the €3bn that is due in March 2013," Mr Kenny told the Dail. The Government is looking for concessions in a "different area" to Greece, he added.

His comments came after European finance ministers agreed to cut the rates on Greece's bailout loans and suspend interest payments for a decade to give Greece more time to repay the money it owes.

The deal paves the way for the release of urgently needed aid loans.

The deal, clinched at the third attempt after weeks of wrangling, removes the biggest risk of a sovereign default in the eurozone for now, ensuring the near-bankrupt country will stay afloat at least until after a 2013 German general election.

Earlier, Portuguese Finance Minister Vitor Gaspar said in Lisbon that Ireland and Portugal both stand to benefit from the deal.

"Portugal and Ireland, which are programme countries, will benefit through the conditions opened in the framework of the European Financial Stability Mechanism," Mr Gaspar said.

The suggestion was rejected by the Department of Finance.

"Last night was about Greece, not Ireland and there was no discussion on extending the conditions or concessions agreed for Greece to Ireland," a spokesman said.

Private sector economists in Dublin welcomed the Greek deal with one calculating that it could shave billons off the national debt if the same terms were extended to Ireland.

"There are some important precedents set for Ireland and Portugal if their programmes look like falling short in the coming years," said Goodbody Stockbrokers economist Dermot O'Leary while Davy stockbrokers economist Conall MacCoille said the deal "must surely strengthen Ireland's hand in negotiations with the EU".

Deficits

Owen Callan, an analyst at Danske Bank in Dublin, calculated that an Irish deal similar to the Greek one would shave €12.5b off total Irish deficits over the next decade. That would be equivalent to 8pc of gross domestic product.

Separately, the Organisation for Economic Co-operation and Development said a deal to reduce Ireland national debt would "ease the burden".

The comments came in the Paris-based think-tank's semi-annual report on the Irish and global economies.

The OECD forecasts the local economy will expand 1.3pc next year and 2.2pc the following year after growing 0.5pc this year.

Unemployment will remain at the current high levels.

"While marked progress has been made in resolving the financial and banking crises, economic growth is projected to remain low, but positive, during the next two years," the OECD said in a chapter on Ireland.

The Government should be allowed some wiggle room if economic growth was slower, it added.

The OECD sees the eurozone economy contracting next year and again in 2014 and warned that the debt crisis in the single currency zone was the greatest threat to the world economy. It slashed its global growth forecasts, warning that the debt crisis in the recession-hit eurozone was the greatest threat to the world economy.

It also urged central banks to prepare for more exceptional monetary easing if politicians failed to come up with credible answers to the debt crisis.

Irish Independent

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