Euro council chief calls for deal on bailout interest rate cut
Published 17/06/2011 | 17:29
European Council president Herman Van Rompuy has called on Governments blocking Ireland's attempt to achieve an interest rate cut on the €67.5bn troika loans to "reach a deal".
He said a rapid solution to the impasse over lowering the interest rate on bailout loans to Ireland is necessary.
"I'm fully aware this is a sensitive issue for Ireland," Mr Van Rompuy said. "We continue to work with our partners to find a solution."
The Government has failed to secure a reduction on the 5.8pc interest rate on the EU portion of the loans amid French demands that Ireland raise its corporation tax from our 12.5pc rate.
Minister for Finance Michael Noonan has ruled out any cut in corporation tax, saying it is not up for negotiation.
Meanwhile, he did not ruled out the burning of unsecured bondholders at Anglo Irish Bank and Irish Nationwide.
The Government announced this week it wants to save taxpayers’ money by getting the bondholders to take discounts of up to €3.5bn.
Market watchers have expressed concern about the burden-sharing of senior bondholders, as it may make it more difficult for AIB and BofI to return to the open markets next year to borrow money rather than relying on ECB funding.
But speaking at Government Buildings this afternoon after meeting the Taoiseach Enda Kenny, Mr Van Rompuy agreed Ireland could discuss burning bondholders with Europe – yesterday the European Commission said it was also open to the discussion.
However, the buck stops with the European Central Bank (ECB) which, until now, has been against such a move.
Any decision will need the green light from all three members of the troika which is lending Ireland €67.5bn – the European Commission, the International Monetary Fund and the ECB.
So far, both the Commission and the IMF have not ruled out burning unsecured bondholders in the two nationalised institutions.
But the ECB, so far, is maintaining its resistance to any such plan.