EU insists bailout terms for Ireland loans won't be eased
THE EU has denied that it is considering easing the terms on Ireland's bailout loans after reports suggested that a breakthrough was imminent.
Troika officials told the Irish Independent that there had been no discussion on extending the repayment period on Ireland's EU loans but that technical talks were still ongoing on the potential restructuring of the €31bn in promissory notes used to bail out the former Anglo Irish Bank.
"No one here is aware of any talks of extending maturity on the loans," said a senior official within the troika yesterday.
"We are not changing our approach and will continue working on the issue of the promissory note," said a spokesman for economics commissioner Olli Rehn.
However Tanaiste Eamon Gilmore said yesterday that the Government had been working with the troika to see if Ireland could get the bailout money on a longer-term basis.
"Those negotiations are not yet completed, there are a number of options being looked at and we will continue with that work over the next period of time," he said.
A spokesperson for Mr Gilmore later said the Tanaiste had been "speaking generally" about reducing the debt burden, rather than specifically addressing any imminent deal.
A source close to the troika said technical talks were still ongoing on the promissory notes, but added that there was little momentum to tackle the issue in the wake of the Spanish bailout and the ongoing political drama in Greece.
RTE News reported yesterday that troika officials were "assessing the effects" of a doubling of the repayment period for Ireland's EU loans, quoting sources that said allowing the country to pay back loans over 30 years, rather than 15, would ease the Government's return to the markets, which is planned for next year.
Last year, eurozone leaders agreed to double the average maturity of Greece's bailout loans from 7.5 years to 15 years. The same was done for Ireland's and Portugal's loans.
The majority of Ireland's bailout loans are drawn from two funds -- the commission-backed European Financial Stabilisation Mechanism and the eurozone government-backed European Financial Stability Facility.
The EFSM lends at maturities of up to 12.5 years on average but can issue 30-year loans.
The EFSF can also issue loans that have 30-year repayment periods, but the average maturity of the loans is closer to 15 years.
Former Taoiseach John Bruton told reporters in Brussels yesterday that Ireland's ability to borrow would be affected if the Government reneged on its commitments.
"These were arrangements that were entered into by the previous government," he said.
"If you have to re-enter the markets for any purpose, you need to build a reputation for honouring your commitments."
However, Mr Bruton said Spain should not be given a better deal on a bailout that has been restricted to its ailing banking sector.
"Anything that might be done for countries in an analogous situation ought to be done for Ireland," he added.
The IMF, in its sixth progress report on the bailout, said that "stronger European support" was needed to secure Ireland's return to markets, including extending the term of the promissory notes "and the associated Eurosystem funding" and removing toxic mortgages from the banks' balance sheets.
It said EU rescue funds should take "temporary equity participation" in weaker banks to break "bank-sovereign linkages" and improve debt sustainability.
The European Central Bank is also keen to see EU rescue funds bail out banks directly, but has rejected the notion of giving the EFSF or the future European Stability Mechanism a banking licence to fund direct lending.