Ireland, Portugal win eased bailout loan terms from EU

The European Commission has decided to offer Ireland and Portugal lower interest rates and a longer repayment window on loans from an EU-wide fund that also contributes to eurozone bailouts, the EU executive said on Wednesday.

According to Irish government estimates, the new terms — which need to be rubber-stamped “in the coming weeks” by European Union states and the European Parliament — will mean annual savings for Dublin of 600-900 million euros.

The commission will now bring down to between 3.0 and 3.2 percent the interest rates charged on loans made under the European Financial Stability Mechanism, said a source who spelled out that the savings would also be backdated.

The EFSM is a 60-billion-euro fund using guarantees from all 27 European Union states, over and above the main, 440-billion-euro European Financial Stability Facility from eurozone-only nations.

The commission is also offering to extend the maturity on these loans to a maximum of 30 years, as against the present 15 years.

The average duration of loans under the Irish and Portuguese bailouts will now pass to 12-and-a-half years as opposed to seven-and-a-half.

The changes are in line with decisions reached by eurozone governments at a July 21 emergency summit that agreed a second Greek bailout worth 160 billion euros, after a May 2010 rescue amounting to 110 billion.

Greece, Ireland and Portugal were each to benefit with eased repayment terms.

The second bailout has yet to be ratified.