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Kenny tells Barroso interest rate on bailout must be cut

Fine Gael leader Enda Kenny has insisted that he will continue to lobby for a more lenient interest rate on EU bailout loans after meeting EU Commission chief Jose Manuel Barroso.

"We made it clear that we were coming out here to send a signal that if we get a mandate from the people in the general election at home that we would see the need for a renegotiation of aspects of this package," Mr Kenny said.

However, he said that a "reduction in the context of numbers" did not crop up.

Mr Kenny and his finance spokesman Michael Noonan met Mr Barroso to set out their stall ahead of their likely election victory next month.

Both men acknowledged that an interest rate reduction would have to be agreed with all of Ireland's 26 EU partners as part of more comprehensive talks on expanding the EU's crisis-fighting power.

"It's perfectly clear that we have to work in co-operation with our European colleagues because this is a matter for all of the members," Mr Kenny said.

Describing the Portuguese Commission president as "one of Ireland's best friends", Mr Noonan said that his party was well-placed to renegotiate the rate given the fact that it is a member of the same umbrella grouping in Europe as Mr Barroso and German chancellor Angela Merkel.

He said the reduction would boost growth and jobs in Ireland.

"If the interest rate were to come down it would increase our potential for growth and for getting our people back to work," Mr Noonan said.

However, he hinted that any benefits from an interest rate cut would only kick in after the EU's current rescue fund expires in mid-2013.

EU leaders will meet next Friday for talks on boosting the European financial stability -- the €440bn fund which is lending €17.7bn to the Government as part of a larger bailout -- but they are also discussing a permanent mechanism to give cash injections to solvent countries facing market pressure.


"Even though the Irish bailout arrangement has been negotiated already and we're in a contractual position as a country, we would like to enjoy any benefit retrospectively if there are new rules," Mr Noonan said of the post-2013 agreement.

He said that he expected a deal to be reached at a Brussels summit in March.

He also said that Fine Gael was prepared to face a referendum to bring in borrowing limits and renegotiate with Ireland's private debtors who hold unguaranteed bank debt in the region of €15bn.

EU officials have said that any move to burn bondholders would be a bailout dealbreaker, but Mr Noonan insisted that positions were shifting in Brussels and other European capitals.

EU leaders agreed last year that private debtors could share in the cost of future bailout, but only where a country faces insolvency.

Irish Independent