Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 75: To ask the Minister for Finance if he will renew his valuable current efforts to secure a cut in interest rates on EU loans for the bailout programme; his views that Ireland should at least be paying no more than Greece; and if he will make a statement on the matter. [21705/11]

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 76: To ask the Minister for Finance if he will ensure that any bailout interest rate cut will also apply to repayments on loans already drawn down, which is also a critical outcome for Irish economic recovery; and if he will make a statement on the matter. [21706/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I propose to take Questions Nos. 75 and 76 together.

As the Deputy will be aware, in March 2011, the Euro Area Heads of State and Government agreed in principle to a reduction in the interest margin charged to programme countries. This has been applied in respect of Greece and Portugal. However, a decision to apply it to Ireland's loans has not yet been taken. This is because another Member State is asking for Ireland to deliver a quid pro quo in return for an interest rate reduction in the form of a change in our Corporation Tax. However, we have made it clear that we will not agree to this.

It is the Governments strong position that the margin being charged on loans from both the EFSM and the EFSF is excessive. This argument, which has been supported by the European Commission, is one that I and my Government colleagues plus our officials make at every possible opportunity. In my recent engagements with Troika senior officials I raised the issue of programme pricing. I have also continued to do so at every suitable opportunity at EU level.

The Government also avails of every suitable opportunity to press our case to have the reductions applied for the Greek and Portuguese programmes applied to Ireland. The value of any reduction granted to Ireland compared to what was agreed previously for Greece will be known if and when a decision is taken on granting such a reduction, and on the terms and conditions on which it is to be granted. This issue has now moved primarily to the political sphere. It has been raised on a number of occasions in the past two months, including the Taoiseach's meeting with President Sarkozy at last months European Council, the Tánaiste's meeting with his French colleague, Foreign Minister Juppé, and my own bilateral with the previous French Finance Minister Lagarde. The issue is a key agenda item at tomorrows meeting of Euro Area Heads of State and Government – where the Taoiseach will once again present the Governments established position on the broader issue of the appropriate rate for the EU programmes.

In relation to the application of any reduction, it is my understanding that any interest rate margin reduction secured will apply to interest due on both existing and future drawdowns, but will not apply to any interest payments already made. In this context, I would refer the Deputy to my response to PQ 15570 of 14 June last.