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6.7% rate would sink Ireland, says McWilliams

As negotiations reportedly push to close bailout deal tomorrow, economist David McWilliams says a 6.7% interest rate would mean €5.7bn in interest repayments every year.

THE NEGOTIATIONS FOR IRELAND’S EU/IMF bailout deal are pushing to close the deal before the markets reopen on Monday morning, the Irish Times reports.

Speculation continues over the cost of the bailout for Ireland.

Last night, RTÉ reported that a 6.7% rate was likely to be charged for the EU/IMF deal.

The Irish Independent reports that while 6.7% may be charged for a portion of the fund, NCB Stockbrokers says that rates of 5.23% and 5.85% could be charged for other parts.

Speaking on RTÉ Radio One this morning, economist David McWilliams said a 6.7% rate “will sink the country”. He said that rate means making €5.7bn in interest repayments alone every single year.

He proposes a debt for equity swap, but says “our negotiators don’t have the courage to put it on the table”.

He said Spain is the reason the negotiators are pushing to finish the deal before markets re-open on Monday. The Financial Times reports today that Spain’s prime minister has denied the country is in any need of a rescue after European bank shares spent last week taking hits on the markets.

Greece was charged 5.2% for its bailout package.

McWilliams said Ireland faces a different rate to that offered to Greece because the Greeks don’t have a banking crisis; Greece had a sovereign debt crisis that became a banking crisis, whereas the reverse happened in Ireland.

He said a 6.7% rate would be like “signing the Irish economy away for the next 10 years”.

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