Frank Fahey (Galway West, Fianna Fail)

I welcome the introduction of the Bill, which provides an opportunity to clarify some of the issues relating to the interest rates which apply in respect of the money made available to Ireland by the EU and the IMF. While there will be a slight reduction in the interest rates, it is interesting to consider some of the comments that have been made, particularly by Opposition spokespersons, regarding the IMF-EU deal and the position relating to interest rates.

The Minister for Finance, Deputy Brian Lenihan, has stated that there could only be changes to the interest rates if an overall renegotiation of the assistance mechanism was engaged in by all member states. Deputy Noonan acknowledged that point. In the context of the deal the Government obtained in respect of the interest rates, it was made clear that the 5.8% rate could not be improved upon unless an overall agreement in respect of the assistance mechanism was reached. It has been claimed that Ireland is paying higher interest rates than Greece. The latter is now seeking to obtain terms similar to those which apply in respect of Ireland. The interest rate being charged to Greece is 5.2% for three-year loans. The important point with regard to Ireland's case is that we are paying a rate of 5.8% in respect of a 7.5 year loan. The Government is to be applauded for ensuring that we obtained money over a longer term.

As Mr. Michael Somers, former Government of the Central Bank, stated recently, the NTMA is going to be in a position to return to the bond markets, sooner rather than later, in order to borrow two or three-year money based on the fact that we will have the money from the EU and the IMF in the banks, as it were, for a period of seven and a half years. Many economists are predicting that we will be in a position to borrow two to three-year money at a rate of approximately 4.4%. This was the rate which applied prior to the crisis involving Greece. If we return to the markets and obtain money at the rate to which I refer, it will prove that the IMF and the EU arriving in Ireland was not the crisis which people originally made it out to be. Everyone would prefer if it had not been necessary to agree a package with the IMF and the EU. However, that package is providing us with stability and it will provide the new Government with the stability required in order to try to restore fiscal and economic fortunes.

It is important to take this opportunity to consider what has been said in Europe and here at home in respect of this issue. The German Foreign Minister stated that it is clear that we cannot renegotiate the interest rate. His colleague, the German European Affairs Minister, Mr. Werner Hoyer, rejected the idea that a new Government would be able to negotiate a lower rate of interest and stated:

I think this is complete nonsense and should not be used for domestic political gains. The Irish Government has negotiated a very difficult deal and it has done so very successfully.

And, of course, it would question not only the seriousness of the Irish Government but that of the (European) Commission and the partner countries if one made such a political link. That doesn't fit.

I recall the iconic moment when Deputy Gilmore waved a copy of the document relating to the EU-IMF deal above his head in the House and stated that Labour would not accept it. He was attempting to fool the people. Deputy Gilmore stated that the deal was bad and that it would have to be renegotiated. He further stated that the elements of any negotiations would have to centre on bondholders and the extent of the bank bailout, the interest rate and that fact that the deal does not contain an investment strategy. Mr. Ajai Chopra from the IMF described the €85 billion bailout package as a very good deal for Ireland. He also stated that a 5.8% average interest rate "is clearly much better than one could get if Ireland had to borrow on the market right now".

Fine Gael has adopted a two-pronged approach to this matter. To be fair, Deputy Noonan has been quite responsible in respect of this issue. On 6 January, he accepted that the IMF rate of interest payment cannot be changed. He also conceded that renegotiating the interest payment with the EU would be extremely difficult. However, Deputy Varadkar would be at the top of Fine Gael's agenda in any renegotiation. He even stated that this could be part of a new deal introduced before the next budget.

Deputy Gilmore, in stating that the deal can be renegotiated, indicated that the Irish taxpayer has been expected to bail out the banks and the bondholders. He also stated that Ireland is being charged a penal rate of interest, that the deal is bad and that it will have to be renegotiated. The interest rate is the key aspect of the deal Deputy Gilmore intends to renegotiate. Again, Labour Deputies have made completely irresponsible statements in the House to the effect that, in government, their party is going to be in a position to carry out a bilateral renegotiation of this deal. That is not possible and those in the Labour Party should have the courage to admit as much. They should also admit that any renegotiation of the interest rate will be on the basis outlined by the European Council of Ministers in Brussels in recent days. Any new deal must involve a total change in the way in which European countries make this money available.

It is important that we should be honest in the period leading up to the general election.

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