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Central bank chief expects cut in EU/IMF loan interest rate


Central Bank Governor Patrick Honohan. Photo: Tom Burke

Central Bank Governor Patrick Honohan. Photo: Tom Burke

Central Bank Governor Patrick Honohan. Photo: Tom Burke

Central Bank Governor Patrick Honohan expects the interest rate on the EU/IMF €67.5bn loans to Ireland will be reduced "in due course."

And he has predicted that bond market conditions will improve - on the same day that the Government “categorically” ruled out the possibility of a second bailout next year.

Debt market conditions are now worse than when Ireland signed up to the €67.5bn EU/IMF loan late last year.

“Market conditions now are worse than they were then, but market conditions will improve,” Mr Honohan said launching the Central Bank’s annual report.

The Government “‘will go back into the markets just as soon as it judges that’s the right thing to do.”

Finance Minister Michael Noonan said today that there’s “no question” of Ireland needing a second bailout package next year.

His comments came after a weekend interview in which Transport Minister Leo Varadkar said that Ireland was “very unlikely” to re-enter the markets next year, as set out in the bailout plan.

Mr Noonan added the Mr Varadkar’s comments were “reasonable” in the context of raising private finance for state projects, he said the aid program didn’t require a “full” return to the markets next year.

Meanwhile, the annual report showed that Professor Honohan had taken a 20pc pay cut, bringing his salary to €276,000.

The Central Bank made a profit of €840.9m last year, €671m of which will be paid to the Exchequer.

But the figures are lower than those of 2009, when it made profits of €933.8m.

He added that he doesn’t expected any major surprises from the results of stress tests on the nationalised Anglo Irish Bank and Irish Nationwide when they are released tomorrow.

'There is going to be stuff tomorrow on that but I don't think they are going to be big headlines,' Patrick Honohan told a news conference at the launch of the annual report.

Both lenders, which are being wound down, have said they do not expect the stress tests to show they require additional capital on top of the €34bn they have already been given.