Ireland's interests would not be served by imposing a haircut on its sovereign bondholders, the Minister for Finance said today.
Under a plan to lower Greece's debt burden and try to contain the two-year-old euro zone crisis, the region's leaders struck a deal overnight with private banks and insurers for them to accept a 50 per cent loss on their Greek government bonds.
Minister for Finance Michael Noonan said the deal secured the future of the euro and ended the threat of global recession, while stressing Ireland has so far passed each of its EU-IMF bailout reviews and returned the economy to growth this year.
"We have succeeded in the last couple of months in breaking the perception that somehow or another we were some kind of displaced Mediterranean in the North Atlantic. We are not. We are a North European economy," he said in a speech.
"We have similarities with the UK, the Netherlands and with Germany in the structure of our labour market and in the way we organise ourselves."
International investors have warmed to Ireland in recent months after Dublin, piggybacking on a worsening Greek crisis, won concessions amounting to around €1 billion annually on the cost of its own bailout loans.
The Government is seeking to build on those gains by reducing the cost of financing the country's bank bailout, which has seen nearly €63 billion in state funds poured into five lenders, by possibly tapping an enlarged euro zone bailout fund for cheaper loans to refinance the bank-related debts.
Although the country is only mid-way through an unprecedented eight-year cycle of austerity, Mr Noonan said Greece, the first country to receive a bailout, would continue to be far worse off for some time to come.
"If you look at the Greek situation, if you look at the best case scenario... they are looking at another 10 years of austerity programmes. At the most malign scenario they say the Greeks won't be out of trouble until 2027," Mr Noonan said.
Mr Noonan confirmed today that the budget adjustment of at least €3.6 billion will be divided on a ratio of 2 to 1 spending cuts versus tax hikes and that he would lay out the Government's updated medium-term fiscal plan on November 4th.
He said Ireland's export-driven economy had a huge vested interest in Europe returning to growth, which he said was the essential ingredient for dealing with the current crisis.
He hoped incoming European Central Bank president Mario Draghi's signal on yesterday the bank stood ready to keep buying the bonds of troubled euro zone countries despite German misgivings marked a change of policy.
"I hope he is signalling a policy change because entering into the market in the way that has been done on a permanent basis is what the Bank of England always does and its what the Fed does in the United States," Mr Noonan said.
Reuters