Germany, France rule out easing of Irish bailout terms

 

Germany and France have ruled out offering easier bailout terms to Ireland and Portugal, saying that financial markets would view concessions as a sign that their aid programs are skidding off track.

German finance minister Wolfgang Schaeuble and French finance minister Pierre Moscovici said it would be a mistake for the two countries to demand the lower interest rates and longer repayment times that were granted to Greece last week.

Greece is a "very unique case," Mr Schaeuble said before a meeting of euro-area finance ministers in Brussels today.

"For Ireland and Portugal, which are on the verge of regaining access to markets, it would be a devastating signal and I would really advise them not to pursue this point any further."

European leaders are counting on the return to markets by Ireland and Portugal to show that the crisis-fighting strategy has shielded the rest of Europe from the fallout from Greece, the continent's most debt-ridden country.

Greece, still struggling to pay its bills after €240 billion in loan pledges and history's biggest writedown of privately held debt, was last week granted extra time to cut its deficit in addition to the easier loan terms.

Mr Moscovici, testifying jointly with Mr Schaeuble to a European Parliament committee today, said Ireland and Portugal are "clearly not in the same situation" as Greece, the country where the crisis started.

The aid programs are also different. Greece was the only country to obtain bilateral loans, in its first package. Its second package tapped the European Financial Stability Facility, also used for Ireland and Portugal.

Minister for Finance Michael Noonan signalled that easier terms may be too much to ask for, saying Greece was saddled with "onerous" conditions to obtain them. Still, he said, Ireland will see "if there's something in the Greek deal that offers us another element."

Mr Noonan called two points - the reduction in EFSF lending rates and a 15-year extension of maturities - "an interesting idea."

Portugal is pursuing similar concessions, based on a July 2011 pledge by European leaders to treat aid recipients equally.

"We will see within the euro group in what terms Portugal and Ireland may benefit from that principle of equal treatment," Portuguese prime minister Pedro Passos Coelho said in Cape Verde yesterday.

Bloomberg

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