Ireland to seek rate cut for EU bailout next week: report

2nd April 2011, Comments 0 comments

Irish finance minister Michael Noonan will seek to lower the interest rate charged on the eurozone nation's multi-billion-euro EU-IMF bailout next week, the Irish Times said Saturday.

Noonan will press for a cut in the loan rate when EU finance ministers hold an informal meeting in Budapest on April 7-9, the paper said, citing sources at the Department of Finance.

The news comes after the Irish Central Bank ruled Thursday that four lenders needed to raise another 24 billion euros ($34 billion) to withstand another crisis, after carrying out vital stress tests as a condition of the bailout.

"He (Noonan) will be explaining the results of the stress tests and the actions that the government is going to take," the Irish Times quoted a source as saying.

"Debt sustainability is important. Running down the interest rate can help that."

The Central Bank had also ordered a drastic overhaul of the eurozone nation's stricken banking sector on Thursday, as the total cost of bailing out its lenders was set to top 70 billion euros.

Ireland, plagued by banking worries, was rescued last year with a huge 85-billion-euro ($115-billion) bailout package, which included a contribution of 67 billion euros from the European Union and International Monetary Fund.

The last Irish government was kicked out by voters earlier this year amid deep-rooted public anger over the humiliating deal.

The new administration, headed by Prime Minister Enda Kenny, wants partners to lower the average 5.8-percent interest it must pay for international financial assistance.

However, eurozone leaders have so far refused to give Dublin the same leeway as Greece, which saw a one-percentage-point interest rate cut and its repayment period extended last month.

Kenny has vowed to resist EU pressure to raise Ireland's cherished 12.5-percent corporation tax rate, in return for easier terms on the rescue package.

The rate is considerably lower than other European countries, sparking accusations from EU leaders that it gives Ireland an unfair advantage and makes Dublin's problems worse because the government loses revenue.

Meanwhile, staff from the European Commission, the European Central Bank and the International Monetary Fund will arrive in Dublin on Tuesday to review the bailout programme.

© 2011 AFP

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