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Brussels says report on Troika loan proposal is "simply not true"

The European Commission flatly denies an RTÉ report saying the Troika are considering extending the schedule for repayments.

The ECB's Klaus Masuch, the EC's Istvan Szekely and the IMF's Ajai Chopra, in Dublin today.
The ECB's Klaus Masuch, the EC's Istvan Szekely and the IMF's Ajai Chopra, in Dublin today.
Image: Sasko Lazarov/Photocall Ireland

THE EUROPEAN COMMISSION has described a report suggesting that the Troika could propose to extend the repayment schedule for Ireland’s bailout loans as “simply not true”.

A spokesperson for economics commissioner Olli Rehn told TheJournal.ie that a report carried by RTÉ News was incorrect and that there was no suggestion of any plans to extend Ireland’s loans in such a way.

RTÉ had reported that the three international lenders were preparing a proposal to lengthen the terms of the bailout, which would mean that Ireland’s loans would be repaid over a 30-year basis instead of the 10 or 15-year basis as at present.

Ireland has three loans outstanding from the European Financial Stability Facility, which are due for repayment in February 2015, July 2016 and February 2022.

Another six loans have been drawn down from the European Financial Stability Mechanism, maturing in December 2015, April and December 2018, June 2021, September 2026, and April 2042.

All four of the IMF loans drawn down to date, meanwhile, are due for repayment 10 years after they are accessed – with loans due for repayment in January, May, September and December 2021.

Extending the repayment schedule of these loans would mean that Ireland would face lower annual repayments, and have more time to accumulate the cash to repay the principal of the loans.

RTÉ’s report – which BBC business correspondent Joe Lynam said he believed was “roughly accurate” – said the move was intended to give a clear signal that private holders of Irish sovereign bonds would receive their full payout when due.

This, in turn, would hopefully reduce the yield – or interest rate – on Ireland’s government bonds, ideally lowering the cost of borrowing to a rate which would allow Ireland to borrow on the open markets and not be dependant on funding from the EU or IMF.

It added, however, that the proposal had not yet been presented to the Irish government or to the European Council, the body of EU leaders which would ultimately need to sign off on any restructuring of Ireland’s bailout loans.

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Gavan Reilly

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