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Support grows for bailout interest rate cut

The Government got further backing last night for a cut to the interest rate on the bailout as talks began with the IMF and EU on the deal.

The first major review of the €85bn international bailout began yesterday afternoon as a team from the IMF, European Commission and European Central Bank began a series of briefings in the Department of Finance and Central Bank.

The review will go on for 10 days and the leading figures, such as IMF European department deputy director Ajai Chopra, have yet to arrive.

Meanwhile, Taoiseach Enda Kenny faced accusations that his banking policy is the same as the previous Government.

On the plus side, European Commission chief Jose Manuel Barroso said it was "fair" that Ireland should get the same cut as Greece, which already saw its interest burden fall by 1pc.

"We can't impose costs which are very, very difficult for our Greek or Irish citizens to pay, but we also have to look at the substance of the debt and how it is to be managed," he said.

But sources have indicated it is unlikely a rate decision will be made when finance ministers meet in Budapest later this week.

Finance Minister Michael Noonan will raise the issue at the talks, but sources say the decision won't be taken by EU finance ministers.

Forthcoming elections in Finland and Germany and French insistence on linking a rate cut to an increase in Ireland's 12.5pc corporation tax are adding to the holdup.

Ireland's 11 sitting MEPs met with the European Commission's economics chief Olli Rehn to press him on the country's precarious financial position.

Fine Gael MEP Sean Kelly told Mr Rehn the 3pc premium being charged on Irish loans was illegal given that bailouts agreed in 2009 for Latvia, Romania and Hungary did not include an extra fee.

Defending the Government's decision to put €24bn of recapitalisation into the banks, in the Dail yesterday, Mr Kenny said it had decided to create two pillar banks, bringing "clarity and certainty" to the sector.


But Independent TD Shane Ross said making AIB and Bank of Ireland the main banks would give them the opportunity to "crucify the consumer".

Mr Ross said Mr Kenny ought to be worried that the greatest cheerleaders on his banking policy "are on the Fianna Fail benches".

Sinn Fein leader Gerry Adams also accused the Government of breaking promises made in the general election campaign. He said Mr Kenny's five-point plan was now a "five-point U-turn".

Irish Independent