Noonan: loan payment deal a help but no 'game changer'
Published 23/01/2013 | 05:00
Finance Minister Michael Noonan said EU finance ministers' agreement to consider extending maturities of rescue loans to Ireland is "significant" though not a "game changer".
He was speaking after the European Commission backed a proposal to look at extending the repayment period on some of Ireland's bailout loans.
European finance ministers agreed to examine the issue yesterday after the 17 eurozone ministers gave the plan the green light on Monday.
Mr Noonan told the EU parliament's Committee on Economic and Monetary Affairs that while there had been agreement on significant issues there were still outstanding items to be negotiated.
He said there was no question of debt write-offs – longer maturities and low interest rates are at the core of the negotiations on the promissory note.
A Commission document looking at options for Ireland to leave the bailout is due within weeks.
EU commissioner for economic and monetary affairs Olli Rehn said the Commission was ready to explore the issue of extending the maturities on some of Ireland's loans to find an "appropriate political and technical solution".
Under the proposal, European officials will examine lengthening the maturities on loans secured from two European bailout pots under the rescue package agreed for Ireland in 2010.
Loans to Portugal will also be looked at.
Mr Rehn said the loans issue had been "brewing" for some time.
"From a Commission point of view, I can say that our standpoint is favourable for this as this is in line with the commitments undertaken by the European Council in July 2011. We are ready to explore this further in order to find an appropriate political and technical solution," Mr Rehn said.
The move is seen by the Government as an important step in its bank debt campaign, although it remains separate from its attempts to get a promissory note deal.
It is also looking for a wider deal on its legacy banking debt involving Europe's permanent bailout fund, the European Stability Mechanism.
Mr Noonan said the proposal could save the State billions of euro. Mr Rehn said the Commission would return to the issue at March's Ecofin meeting of European finance ministers.
Earlier, Mr Noonan said that the proposal, if successful, would be welcomed by the markets and could increase their willingness to provide money to Ireland at low interest rates.
The State received €17.7bn from the European Financial Stability Facility under the terms of the €67.5bn bailout in late 2010.
A little more than €12bn has been drawn down so far in different tranches with varying maturities. The State also received an additional €22.5bn from the European Financial Stability Mechanism. "It will increase the willingness of the markets to lend to us at low interest rates," Mr Noonan said.
The nuts and bolts of how the loan maturities would be extended if the proposal goes ahead have yet to be worked out, but Mr Noonan said it has the potential to enhance the sustainability of Irish debt.
Fianna Fail said the measure was already promised in June 2011 and questioned the delay in implementing it.