Discount of 1pc on our bailout rate is now firmly on cards
European finance ministers set to agree reduction once rescue package for the Portuguese economy is finalised
THE prospect of Ireland getting a 1pc cut on its bailout interest rate rose considerably after a meeting of European finance ministers yesterday.
While Finance Minister Michael Noonan didn't confirm the rate cut, other European finance ministers indicated that that such a move was now virtually certain -- with a deal likely once Portugal's rescue package has been finalised.
The discount was discussed by the finance ministers in Budapest yesterday. A cut in the rate will lower the price of the billions the Government is preparing to draw from the bailout fund for the Irish banks in the coming months.
Mr Noonan insisted that his European colleagues were all aware that Ireland would not be agreeing to any changes to its low corporation tax regime in order to secure the concession.
Mr Noonan continued to lobby for a rate cut on the EU portion of Ireland's bailout at the informal meeting of his European colleagues, telling them it was an "important" issue for this country and that he would like to see it sanctioned before the Government starts drawing down "serious" money for the banks.
Mr Noonan met German finance minister Wolfgang Schauble and his French counterpart Christine Lagarde in separate side meetings.
"It is important that interest rates are reduced in Ireland to ensure the price of the bailout is less expensive and he (Mr Schauble) understood that point," said Mr Noonan.
The Government is preparing to put another €24bn into the Irish banks to finally fix them.
Mr Noonan had signalled that the money would be put into the banks by mid-June, but yesterday said there was no firm deadline.
The ECB is prepared to give Bank of Ireland time to raise the capital that it needs, in the hope that it can avoid being nationalised.
Mr Noonan said the ECB's commitment on March 31 to ongoing liquidity provision for Ireland's banks was "in effect, an ECB commitment to medium-term funding".
He said there was "no big rush to recapitalise" Bank of Ireland, which has to raise €5.2bn, adding that Irish banks were "adequately capitalised".
While Mr Noonan didn't confirm the rate cut, Belgian finance minister Didier Reynders said that Ireland would get a discount on the interest rate it pays on its EU loans, but that a deal would only be reached after Portuguese aid talks were concluded in May.
"We have discussed today about Portugal so it may be for next meeting of the (ministers), we will see," he said after the meeting.
He said a decision on the Irish question should be reached "as soon as possible".
"We need to apply a level playing field, so if it's possible to prove that we need to have the same solutions for the same countries, it's the best conclusion," he said when questioned on whether Ireland would receive a concession.
Greece was granted a 1pc reduction during a March summit, which Luxembourg's prime minister Jean-Claude Juncker said would be backdated in order to include payments already drawn down, "thus making debt more sustainable for Greece".