Cost of borrowing on markets could fall if easing of bailout terms goes ahead, says Noonan
INTERNATIONAL money markets may lend to Ireland at low interest rates if a proposal to extend the pay-back period on some its European bailout loans goes ahead, Finance Minister Michael Noonan said this morning.
The 17 Eurozone finance ministers last night agreed in Brussels that the loans to Ireland and Portugal under the European Financial Stability Facility (EFSF) would be examined by officials to see if their maturities can be extended.
Mr Noonan said the move could amount to billions of euro in savings.
Ireland received €17.7bn from the EFSF under the terms of the €67.5bn bailout in late 2010. Just over €12bn has been drawn down so far in different tranches with varying maturities.
A similar request is being made today for monies received from another leg of Ireland’s bailout, the European Financial Stability Mechanism (EFSM).
Mr Noonan, who is to chair the Ecofin meeting of the union's finance ministers in Brussels as part of Ireland's presidency of the EU, said if the proposal succeeds, the markets will welcome it.
“It will increase the willingness of the markets to lend to us at low interest rates,” Mr Noonan said.
The nuts and bolts of the mechanics of how the loan maturities would be extended if the proposal goes ahead has yet to be worked out.
Mr Noonan said the negotiations on securing a deal on easing the terms of the punishing Anglo Irish promissory note are continuing and that the latest proposal is separate from those negotiations.
Ireland took over the rotating six-month EU presidency this month during which it hopes to strike a bank debt deal with the European Central Bank on the contentious Anglo Irish promissory notes and pave the way to exit it's rescue programme on schedule at the end of this year.
The Government is also hoping to pave the way for a deal this year on its banking debt involving Europe’s permanent bailout mechanism the European Stability Mechanism (ESM).
Ahead of the Ecofin meeting, Mr Noonan said stability, jobs and growth were the themes of the Irish Presidency.