independent

Friday 18 April 2014

Opposition parties dismiss possible loan deal because of no interest rate deferral

A DEAL to extend the maturity of Ireland's rescue loans does not go far enough to help economic recovery, opposition parties have warned.





Olli Rehn, vice president of the European Commission, said signals of an extension from eurozone finance ministers were a sign of growing confidence in Ireland.



But Fianna Fail and Sinn Fein said the Government should have negotiated an interest rate holiday.



Sinn Fein finance spokesman Pearse Doherty said the move to restructure the European Financial Stability Fund (EFSF) loan was a sideshow to the real issues.



"What they haven't done is secure an interest-free holiday for 10 years," Mr Doherty said.



"We won't be able to get out of this programme without a restructuring of the debt.



"We have seen part of that happen last night. But we haven't seen anything in relation to interest, which would be of benefit to Irish taxpayers in relation to budgetary matters."



Mr Doherty said an interest deferral would have a real, direct impact on people's lives. But the Government's failure to secure a deferral or a reduction in its rates would mean no money would be saved by the taxpayer, he added.



Fianna Fail's Michael McGrath said Ireland should seek a 10-year deferral of interest rates, just as Greece did in November.



While he welcomed the extended maturity on the EFSF loan, saying it would help Ireland's overall debt profile in the long run, he insisted more needed to be done by way of an interest holiday.



"That's something that would be of immediate cash benefit for Ireland if that were delivered," he added.



"We would call on the Government to seek and negotiate with our European partners as well as of course advancing the broader promissory note and the ESM equity stake in the Irish banks."



Earlier, Finance Minister Michael Noonan insisted an extension of the maturity of the EFSF loan could save the state billions of euro.



He revealed last night that officials from Europe's Economic and Financial Affairs Council (Ecofin) agreed to consider the extension due to the country's good progress in meeting its debt targets.



He said this would further enhance Ireland's debt sustainability, enable its successful return to the markets and ultimately, save the state billions of euro.



Meanwhile, Mr Rehn said EU states needed to support Ireland and Portugal.



He said the Ecofin meeting reaffirmed the growing confidence in the countries.



"This confidence stems from the determined implementation of the economic reform programmes that we have seen in both Ireland and Portugal," he said.



"I want to underline that a successful return to the markets for these two countries is both in the interests of themselves and, indeed, certainly in the interests of the entire European Union."



The EFSF was introduced in 2010 as a pot of money - funded by eurozone states - to rescue member states hit hardest by the economic crisis.



The aim was to ensure overall financial stability for the eurozone. While the more permanent European Stability Mechanism was created in 2012, existing EFSF programmes for Ireland, Greece and Portugal are ongoing.



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