Michael Noonan (Limerick City, Fine Gael)

The Heads of State or Government of the euro area decided on 11 March last that the "pricing of the EFSF loans should be lowered to better take into account debt sustainability of the recipient countries, while remaining above the funding costs of the facility, with an adequate mark up for risk, and in line with IMF pricing principles" - that is the text of the communique following the meeting. While the rates are, in my opinion, still very high, they have been reduced somewhat for Greece and Portugal. However, the reduction has not yet been applied to Ireland's EU loans. This is because some countries are seeking further concessions from Ireland on corporation tax as a quid pro quo. This was, and remains, the principal obstacle to achieving a reduced interest rate. We have made it clear that this condition is unacceptable.

Since then, the issue of a reduction in the interest rate for Ireland's EU loans has been pursued vigorously by me, by my Department and by other Ministers at European level. I have raised the issue at EU Finance Ministers meetings, most recently at the meeting in May. I have also taken the opportunity to raise it at a recent meeting with the French Finance Minister, Mme Christine Lagarde. I took this opportunity to impress upon Mme Lagarde the importance of the current corporation tax arrangements to the competitiveness and future economic growth of Ireland. In doing so, I stressed the importance of safeguarding the factors that will facilitate the resumption of growth in Ireland.

We also point out in our contacts on this issue that Ireland is living up to its end of the bargain by delivering on all the conditions and targets in the EU-IMF programme by the required deadlines. We have also made clear to our European partners that our success will be their success. To this end, we continue to believe that a swift decision to grant us an interest rate reduction that has been agreed in principle, and from which Greece and Portugal are benefiting already, is in Ireland's and the wider European interest. While, for a variety of reasons, agreement of the interest rate reduction has not been secured, I believe our efforts to date are bringing a better understanding of our position, which is essential to bring about a positive result.

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