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Bailout interest rate will go down, says Varadkar

Leo Varadkar at the opening of the first mountain bike trail (left) in the Dublin Mountains. Main picture: one of the competitors takes an early spill. Martin nolan

A SENIOR government minister yesterday described the EU/IMF bailout interest rate as "punitive" but said that the Government was confident of change.

Transport Minister Leo Varadkar said the State should not pay more than Greece and Portugal for funding, and that he expected the rate to fall.

Ireland pays an average interest rate of 5.8pc on the €85bn bailout package agreed last November with the EU/IMF.

This compares with a Greek rate of 4.8pc, while Portugal has yet to agree a figure.

But a 1pc cut in Ireland's rate is anticipated ahead of a meeting of European finance ministers next week.

"I would anticipate that it would happen," he said.

"I think there is a recognition by the IMF, and increasingly by the EU, that the rate is punitive. If Portugal and Greece get a lower rate, why shouldn't Ireland?

"I think we've done a good job as a new Government in not making concessions on corporation tax for a modest reduction in a rate that was already too high."

Mr Varadkar was speaking at the official opening of the first mountain bike trail in the Dublin Mountains at Ticknock Forest near Sandyford.

He also dismissed calls by UCD economist Professor Morgan Kelly for Ireland to pull out of the bailout deal.

"What he's saying is we can avoid a sovereign default by dumping on the ECB and the six banks, three of which are fully state-owned, and the remaining three which are majority state-owned," he said.

Irish Independent