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Kenny under fire on bailout rate cut

TAOISEACH Enda Kenny came under intense fire last night for failing to win a reduction in the interest rate on our bailout loans -- and for not raising it with EU leaders.

He and Finance Minister Michael Noonan have been markedly reluctant to promise that a reduction in the interest rate will definitely be achieved.

They have become more pessimistic in their language this week in light of continued demands from the French for a cut in Ireland's 12.5pc corporation tax in return. A rate cut must have the unanimous support of all 27 EU countries.

Mr Kenny hit back by insisting that the Government would press ahead with its campaign to reduce the 5.8pc interest rate in the face of strong resistance from the French government.

"So it's very much on the table and we continue to pursue this vigorously," he said.

But Mr Kenny faced criticism yesterday from the Opposition about being keener to engage in "backslapping and getting the old photo calls right" with fellow heads of state, rather than raising awkward issues.

Fianna Fail leader Micheal Martin said the Taoiseach had not raised the issue at a number of meetings with fellow EU leaders -- and demanded he do so at the next meeting on June 17. Mr Kenny said he would.

'Gallic spat'

He had previously been involved in what he said was a "Gallic spat" with Nicolas Sarkozy over the French president's demands to raise our low corporation tax rate in return for an interest rate cut at a meeting of EU leaders in March.

But he indicated yesterday that the Government would continue to push for an interest rate cut by sticking to its diplomatic drive rather than engage in another "Gallic spat" with the French.

"The governments and heads of government agreed on the principle of an interest rate reduction and we will continue that in connection with our French counterparts," he said.

Earlier in the Dail, Mr Kenny said it was unfair that "national interests" were preventing Ireland from getting an interest rate cut that had already been given to Portugal and Greece.

Although Mr Kenny would not be drawn yesterday on a timeline for when an interest rate cut might be achieved, the Government is facing a deadline of getting agreement before October/November.

It has already drawn down €15.6bn of EU bailout funds at the current interest rate of 5.8pc and any reduction will only apply to the €24.6bn due to be drawn down from October/ November onwards.

"The heads of government of 27 countries agreed this should happen. I have faith in the Minister for Finance being able to carry out his responsibilities in this regard," Mr Kenny said.

The Department of Finance could not confirm last night that the 0.6pc interest rate reduction given to Portugal for its bailout deal was the reduction being sought by Mr Noonan.

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Irish Independent