Calls for Irish loan term extension
Euro zone finance ministers late last night called for an examination of whether the maturity of Ireland’s rescue loans from the EFSF temporary bailout fund should be extended.
The move came ahead of a meeting today of all 27 EU ministers at which Michael Noonan will ask for a similar examination of the maturity of loans form the European Financial Stability Mechanism, a separate fund run by the European Commission.
Mr Noonan said the decision was very welcome and very significant, adding that it had potential to further enhance Ireland’s debt sustainability and to facilitate the Government’s successful full return to the markets later this year.
“This recognises the efforts being made by well performing programme countries,” the minister said shortly before midnight in Brussels.
The examination follows a new deal for Greece in which the maturity of its rescue loans was extended. The maturity of Portugal’s loans will also be examined in coming weeks.
“The euro group agreed to refer this issue to senior officials to examine the technical details and they will report back shortly,” Mr Noonan said.
The development comes two months ahead of the deadline for a deal with the European Central Bank to recast the Anglo Irish Bank promissory note scheme. This is central to the Government’s push to regain access to private debt markets.
The ministers also discussed contentious plans to give the ESM permanent fund powers to rescue stricken banks directly but participants acknowledged that the issues raised were highly complex. In spite of deep divisions over the scope of this initiative, Mr Noonan declared himself “happy” with the discussion.
Incoming euro group president, Dutch minister Jeroen Dijsselbloem, declined to offer his assessment of Ireland’s claim for bank debt relief.
He indicated, however, that the ministers will return to the Irish case within two months.
“We will come back to the Irish situation and the Irish banks probably in March,” Mr Dijsselbloem told reporters.
“We’ve talked about the recapitalisation of banks, touched on the issues that will have to be discussed and I think we’ll have a much deeper discussion in coming months.
“It will also have to deal with the issue of those countries that have already had problems with their banking sector and whether the instruments will be available to them. That’s one of the issues that will have to be discussed so we’ll definitely come to that later on.” Mr Dijsselbloem was elected by an overwhelming majority of ministers but Spain did not support him.
Although certain countries have reservations about the dominance of figures from triple A-rated countries in top euro zone jobs, Mr Dijsselbloem rejected any suggestion that he would favour the interests of wealthier countries.
“If we are going to approach the euro zone and the euro area as a zone with a harsh line in the middle between triple A and non-triple A – between the north and the south – then in no way we’re going to move forward,” he said.
“In no way are we going to reach decisions that are so much needed. So that will definitely not be my approach.”
Mr Dijsselbloem, who called for an end to speculation about a break-up of the euro zone, succeeds Luxembourg’s prime minister Jean-Claude Juncker, who led the euro group since 2005.
“I have every admiration for the efforts that Greece has made, have great admiration and great love for Greece as a country and what they have been doing,” Mr Juncker said.
“And I’ve also appreciated the immense efforts that have been made by Ireland and Portugal and I do very much hope those two countries will be recompensed for all their successes in fighting those battles.”