Thursday 18 December 2014

Noonan opens new front in debt battle after Greek deal

Donal O'Donovan and Thomas Molloy

Published 04/12/2012 | 05:00

Michael Noonan with Finnish finance minister Jutta Urpilainen in Brussels

FINANCE Minister Michael Noonan has opened a third front in his long battle to secure a better deal from Europe on the cost of the EU-IMF bailout, amid signs that more countries are now backing Ireland.

But efforts to renegotiate the bailout will be hard-fought, after France and Germany quickly moved to shoot down the idea yesterday.

And Jean-Claude Juncker, chairman of the Eurogroup finance ministers, later dampened hopes of any quick deal for Ireland similar to Greece's.

He said: "I don't think the Eurogroup is prepared to give equally similar treatment to [Ireland and Portugal] when it comes to the detailed discussions taken as far as Greece is concerned."

Mr Noonan is already in talks aimed at getting a deal from Europe to cut the €64bn cost of rescuing the Irish banks with officials from the European Central Bank (ECB) and the European Commission. Those talks are due to finish before Christmas.

Now, Mr Noonan says Ireland could also seek concessions from Europe on the terms of the current bailout deal itself.

That could include being given longer to repay some of the €67bn of rescue loans and interest "holidays" to ease the annual cost of servicing the massive rescue loans.

It came after Greece secured significantly better terms on its bailout loans yesterday.

In Brussels, the finance minister said he was studying the Greek deal to see what it might mean for us.

"We'll examine every element of it to see if there is anything in it applicable to Ireland."

Ireland's debt burden is sustainable, the minister insisted, but the scale of the debt burden is also a drag on economic growth.

Mr Noonan said he was interested in anything in the Greek deal that could help ease country's return to borrowing on the bond markets at the end of next year.

Sources at the Department of Finance said one idea now being considered was the possibility of a temporary "interest holiday" on the bailout debt.

Not having to service the debt for a period of five to six years would lower than annual cost of running the State.

It would also give investors in the bond market confidence that Ireland could comfortably service new borrowings.

However, sources said the Government would weigh the potential gains from any new concessions against the burden of storing up debt for longer.

It's not yet clear whether the latest concession for Greece comes with strings attached, such as greater supervision of its budgets.

Germany and France were at pains to say yesterday that Ireland and Portugal are different to Greece, but there has been support from other sources to a new deal on Irish debt.

Portugal also wants a new deal while Finnish finance minister Jutta Urpilainen said last week that she was ready to consider lengthening loan maturities for Ireland and Portugal if requested.

"From the fairness point of view, it would be understandable to give some kind of relief to them," she added. Finland has long been an opponent of further bailouts.

Her Dutch counterpart also seemed to share the view although Dutch Prime Minister Mark Rutte has since ruled out a new deal for Ireland and Portugal.

Irish Independent

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