Government wants more time to repay bailout debt
We'd like longer EU/IMF schedule, admits Howlin
Published 14/05/2011 | 05:00
THE Government is seeking more time to pay back the bailout loans from the EU and IMF.
Public Expenditure and Reform Minister Brendan Howlin yesterday said it "would be desirable" for Ireland to be given more time to repay the bailout loans.
It is the first time a senior government minister has conceded the difficulty Ireland faces in meeting the deadline to pay back the loans.
Under the bailout agreement Ireland has to repay €67.5bn of loans from the IMF and EU over seven years.
In a significant development, the minister indicated Ireland was now looking to extend the length of time the country has to pay back the loans in order to reduce the amount being paid back each year. This is similar to a homeowner renegotiating mortgage payments and paying it off over a longer period.
The Government is already locked in talks with the EU on a reduction in the 5.8pc interest being charged on the loans.
"Obviously long-term rescheduling of debt is something that would be desirable and we will deal with it," Mr Howlin said.
Greece is seeking more time to pay back its €110m bailout loans and has already had its interest rate cut from 5.2pc to 4.2pc. Portugal is expected to sign a bailout package on Monday at a lower rate of interest than our 5.8pc.
The minister said Ireland would not accept less favourable treatment than any other bailed-out countries.
Last night, officials at the Department of Finance played down his comments. One said: "Ireland will repay our debts in line with their terms and conditions -- this remains the government position."
He added that the minister only made the comments after he was asked if he would like to see the period for paying back the loans extended.
"He naturally agreed, and said that would be desirable."
Mr Howlin made the comments in an interview with Reuters news agency.
Government officials said the main focus now was trying to convince the lenders to cut the interest rate attached to the EU funds.
France and Germany are reluctant to agree to a cut without fresh conditions, including an increase in Ireland's 12.5pc corporate tax rate.
However, EU Commissioner Olli Rehn has backed Ireland's call to cut the cost of borrowing.
The conditions attached to the rescue loans for all three bailed-out countries are at the top of the European agenda this weekend as eurozone finance ministers prepare to meet in Brussels on Monday.
Ministers from the 17 euro countries are due to sign off on a bailout package for Portugal and to consider changes to the Greek deal.
A change in the Irish interest rate is expected to happen soon but has been delayed by the latest Greek crisis.
A source at the European Financial Stability Facility (EFSF) said they were not aware of any moves to extend the Irish loans timetable.
The EFSF is one of the three lenders to Ireland under the bailout.
The source also pointed out that there was no reason not to have the same conditions for all three bailout countries.
"It would make sense to align all three bailouts so Ireland, Portugal and Greece pay back at the same interest rate and have the same amount of time to repay the loans."
However, the source said details regarding the interest charged or repayment schedule were matters for European political leaders. The fund would implement whatever terms political leaders agreed.