Thursday 17 October 2019

Noonan says we won't ask for debt deal after Greece

‘We’ve got what we wanted,’ says Minister for Finance Michael Noonan. Photo: Tom Burke
‘We’ve got what we wanted,’ says Minister for Finance Michael Noonan. Photo: Tom Burke

Sarah Collins in Brussels

Ireland will not seek further debt relief from the European Union or the International Monetary Fund if Greece manages to negotiate similar concessions on its bailout.

Finance Minister Michael Noonan, speaking on his way into an emergency meeting on Greece yesterday, said debt relief was no longer an issue.

"We've got what we wanted," Mr Noonan told reporters in Brussels. "Nobody would look for direct recapitalisation now because the issues have moved on," he said, referring to the option of the EU's bailout fund buying stakes in our banks, which was mooted in the past.

"It's not that we're not interested in reducing the debt burden further, it's just that the things we tried three and four years ago are no longer relevant, and we have put it in a pretty good place now," he said.

Ireland was granted debt relief during its 2010-13 bailout, with the average length of loans extended to more than 20 years, and rates on EU loans halved. And an agreement with the IMF to repay some loans early should save an estimated €1.5bn in interest payments, the Department of Finance estimates.

However, Ireland's debt pile was still the eighth highest in the EU last year, at 93.8 of GDP, though it is expected to fall below 90pc this year.

EU rules force countries with debts of over 60pc of GDP to reduce the excess by a minimum each year, and place strict limits on spending.

Mr Noonan said the European Commission had endorsed his department's calculations on how much money was available over the next five years for investment and tax cuts - known as fiscal space.

"We're operating within the fiscal space available," he said. "We don't have any problem with the fiscal space in the sense of what's in the programme for government," he said, adding, "I would like more room for capital expenditure."

Finance ministers meeting in Brussels yesterday were having a first round of talks on more debt relief for Greece, where the debt burden stood at 176.9pc of GDP last year and is made up largely of EU and IMF loans.

Most euro-area countries - including Ireland - are not in favour of reducing Greece's debt pile but have agreed to consider easing or delaying debt repayments.

"We don't agree with nominal write-offs on the debt, but we would favour a relief of their repayment capacity by extending maturities and reducing interest rates," Mr Noonan said.

The EU and IMF agreed to look into debt relief as part of last summer's €86bn bailout package for the country once the first review was completed, a decision that is still pending and which is needed to unlock a new tranche of aid from the programme.

Greece needs the money to cover debt repayments maturing in June and July.

Irish Independent

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