Commission backs bid to lower bailout interest rate
THE European Commission is throwing its weight behind Ireland's bid to get a lower interest rate on our bailout cash but senior officials last night refused to be drawn on what kind of reduction Ireland could hope for.
The commission's economics chief Olli Rehn yesterday said both he and the commission would "support" efforts to lower the interest rate on the €17.5bn package Ireland is drawing down from Europe's bailout fund.
Under the terms of the bailout, Ireland pays an interest rate of about 6pc on the cash -- even though Europe will pay just 3pc to borrow the money from the international markets.
The topic was discussed at a meeting of eurozone finance ministers in Brussels yesterday, but a final decision is not expected before a summit of EU leaders on March 24.
Speaking after the meeting, the head of the Eurogroup of single currency countries, Jean-Claude Juncker, confirmed the interest rate to be charged by the fund was "under debate" but he refused to be drawn further.
Earlier, Mr Rehn said Europe would have to examine the pricing of the bailout fund "because of the real issue of debt sustainability and its relation to growth dynamism", reflecting fears that high interest rates could make it impossible for countries to repay debts and could stunt growth.
But he stressed there was no possibility of an 'Ireland only' solution to the interest rate of a fund that was set up in the wake of the Greek crisis to help ailing economies across the eurozone.
"If there will be changes to the policy, which I personally support and the commission supports, it will take place for overall European reasons not bec- ause of specifically electoral sta-tements in Ireland," he insisted.
The comments were echoed by Finance Minister Brian Lenihan who said while the interest rate issue could be "discussed" it would only happen in a context of the needs of all the euro area member states.