Ireland should get seven extra years to repay loans
Ireland should be given, on average, an additional seven years to repay its bailout loans, according to a draft paper from the European Commission, European Central Bank and the International Monetary Fund. Reuters has reported that the recommendation is contained in a Troika document that will be considered by EU Finance Ministers at an informal meeting in Dublin this weekend. By extending the repayment schedule, payments would be spread over a longer time, which would give the markets the confidence to lend to Ireland at lower rates.
As Ireland currently holds the Presidency of the European Council, EU Finance Ministers will gather in Dublin this weekend for an informal meeting to consider several issues, such as the fall-out from the bailout for Cyprus and a possible aid programme for Slovenia. According to Reuters, the ministers will also consider a Troika plan under which Ireland would secure extra time to repay bailout loans, so as to improve the chances of easing the country out of the EU-IMF programme and back into normal borrowing from the money markets.
The Department of Finance has declined to comment about the specifics of the Reuters story, but confirmed that the question of extending maturities will be discussed at this weekend’s meeting. The idea of longer repayments was first considered by EU Finance Ministers in January, following a joint proposal from Ireland and Portugal.In March, ministers decided to ask the Troika to come-up with a paper that would focus on the “best possible option” for both countries.
Now Reuters has reported that the Troika document will propose extending the maximum average maturities on the bailout loans by seven years.As this weekend’s meeting is informal, no decisions will be taken.However, Minister for Finance Michael Noonan will be able to gauge what support there is for the measure and if further concessions can be secured. Fianna Fáil has welcomed indications that the maturity of the country’s debt burden could be extended.
The party’s finance spokesman, Michael McGrath, said it would be a significant step that would ensure Ireland would be in a position to exit the Troika programme next year.He said though the challenge would be to remain out of another bailout and urged the Government to use any headroom provided, should it exceed its deficit target, to stimulate demand in the economy.