Kenny says no bondholder losses amid Barroso praise
Taoiseach Enda Kenny said today he was opposed to bondholder writedowns for for countries other than Greece.
Speaking in Brussels after discussions with the president of the European Commission Jose Manuel Barroso, Mr Kenny appeared to be seeking to allay fears the Government may ask bondholders to take losses.
"I did make the point that in respect of the European Stability Mechanism, we don't have any objection to an early introduction of that but it would want to be made perfectly clear that PSI (private sector involvement) is an issue of concern not only to Ireland but to other countries," Mr Kenny said.
"The same clarity of the exclusiveness and uniqueness of this in respect of Greece, as was referred to in July, should be made perfectly clear," Kenny said.
The Government has always insisted it will repay its debt but there are concerns in Europe that if it needed to go to the ESM for more funds when its current rescue package runs out in 2013, private investors could face losses.
Ratings agency Fitch said this afternoon Ireland's credit ranking stands to improve and the country could return to borrowing on the markets in 2013 as planned.
"Assuming no material deterioration of the euro zone crisis, I think it is feasible for Ireland to be back in the markets in 2013, if they continue to do the right things and are able to make progress on deficit reduction," said Tony Stringer, a Fitch country debt analyst.
Mr Kenny said Ireland was “headed in the right direction” economically and confidence in the country was returning domestically and internationally.
Mr Kenny said the reason for this was the Government had imposed discipline on its finances and was meeting its targets.
“I was happy to report to the president that Ireland is indeed headed in the right direction, that confidence is returning and that commentary internationally from business, economics and from a political perspective sees a country that imposed discipline on itself and is meeting the conditions by the Government working with the people”.
“I look forward to the European Council where I can argue from a point of some strength of holding out Ireland as an example.”
Mr Barroso said there were clear signs of an improvement in Ireland’s economy. “Interest rates have come down and growth has resumed.” However, he said continued strong policy implementation was “essential”.
“The agreement of European Union leaders to reduce the margin on European Union loans to Ireland, which I have been long arguing for, is a significant achievement. It will bring important savings for Irish taxpayers.”
“We have very similar views on what needs to be done to support Greece inside the euro to give maximum possible flexibility to the EFSF, to beef up European Union banks’ capital positions.”
He also said a “stronger community approach” was required for the euro zone to meet some of the challenges facing it.
The two leaders discussed measures to tackle Europe’s financial downturn and also ways of generating jobs and growth.
Mr Kenny also backed plans to expand the role of the temporary rescue fund, the European Financial Stability Facility by allowing it to buy sovereign bonds on the secondary market, offer credit lines to governments and provide for bank recapitalisations.
"The maximum flexibility and maximum use of the existing tools that are there go a long way to dealing with the crisis that we face now," Mr Kenny said.
The meeting takes place ahead of the summit of EU heads of state or government on October 23rd.
Slovakia finally ratified new powers for the euro zone's rescue fund today, the last country to do so, clearing the way for a bolder effort to arrest the sovereign debt crisis.
The Slovak parliament approved the plan to bolster the European Financial Stability Facility (EFSF) after voting to hold early general election as demanded by the opposition. A junior partner in the ruling coalition brought the four-party centre-right government down on Tuesday by abstaining in a confidence motion linked to increased powers for the EFSF.
Additional reporting: Reuters