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Greece will repay our €1.3bn loan, insists Lenihan

THE Minister for Finance has insisted that the State's €1.3bn loan to Greece will be repaid.

Brian Lenihan said it would be repaid as the government in Athens sorted out the country's economic problems.

Ireland, said the minister, would not be financially disadvantaged by the loan, which would not be included in our overall national deficit.

The Minister was speaking to the Dail during a debate on legislation to permit the loan, which is part of an overall EU aid package for Athens.

He said it was envisaged that the amount being loaned by Ireland would come to €1.3bn in total, it made provision for an upper limit of €1.5bn.

He told the Dail: "Our financial support package is in the form of loans which will be repaid as the economic position in Greece improves."

The Minister said the EU commission confirmed that "there will be no loss to Euro-zone taxpayers arising from the provision of these loans. In addition, from a budgetary perspective, these arrangements will be taken into account by the commission in its fiscal surveillance procedures."

Ireland's share of the loan will be just less than 1.64pc and payments will be made on a phased basis. Mr Lenihan said, "there is a likelihood that there might be some 'frontloading' of our overall contribution".

Fine Gael said it was supporting the loan, but the party's finance spokesman Richard Bruton insisted that there must be robust scrutiny of whether or not aid to Greece was working.

Mr Lenihan also said there were signs economic activity in Ireland was picking up and we were "about to turn a corner".

"Recent economic data and a range of other indicators show that the economy is stabilising," he said.

This was vindication, he said, of the tough decisions taken by the Government over the past two years.

Ireland will make the contribution as part of a €750bn rescue package to deal with Greek debt and to safeguard the single currency.

Ten eurozone countries have paid €14.5bn in bilateral loans to Greece -- the first tranche of a €30bn loan agreement.

Ireland did not contribute to the first tranche of funding - neither did Belgium, Finland, Slovenia or Slovakia.

Legislation allowing Ireland to lend funds to Greece goes before the Dail today, and is due to conclude all stages by tomorrow evening.