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Michael Noonan attends this morning's meeting of EU finance ministers alongside his Dutch counterpart, and Eurogroup president, Jeroen Dijsselbloem. Council of the European Union

EU finance ministers confirm deal to delay Ireland's bailout repayments

Ministers have asked the Troika to come up with a proposal on the best options for extending the maturities of Irish loans.

THE EUROPEAN UNION’S finance ministers have formally asked the Troika to come forward with proposals for extending the dates on which Ireland’s bailout loans must be repaid.

On the second day of their two-day summit in Brussels, the 27 ministers said they had discussed whether they would be ready, “in principle”, to delay the repayments of the European aspects of the bailout funds for both Ireland and Portugal.

Having established that common ground, they said: “We agreed to ask the Troika to come forward with a proposal for their best possible option for each of these two countries for EFSF and EFSM loans.”

The European Commission, European Central Bank and International Monetary Fund will now prepare proposals for extending the loans, and present the documents back to the EU ministers.

Ironically, this is likely to happen when the ministers hold an informal summit at Dublin Castle on April 12 and 13.

If a deal is not wrapped up by that point, it will probably be ratified when the next formal meeting of the ministers – at the Economic and Financial Affairs Council – is held in Brussels in May.

Deal helps Ireland overcome ‘funding cliff’

Any deal to push back the repayments of Ireland’s bailout loans would be aimed at encouraging investors to lend money to Ireland on the open markets when it emerges from the bailout later this year.

The first €5 billion of the bailout loans is due to be repaid to the EFSM in December 2015, with a further €4.19 billion due back to the EFSF in July 2016.

Extending these loans – by up to 15 years, in the Irish government’s ‘best case’ scenario – would mean the government would have to borrow less from the money markets in the first years after completing the bailout programme.

Extending the loans could also make the loans cheaper overall, as inflation would reduce the value of the repayments in real-terms.

It is not clear whether the proposed extension would also apply to Ireland’s IMF loans, which have an average maturity of between 4.5 and 10 years.

Ireland owes about €19 billion to the IMF, and about €34.4 billion to the combined EFSF and EFSM, which are funded by the 17 Eurozone members and the European Commission respectively.

Just under €3 billion has been borrowed from the UK, Sweden and Denmark on a bilateral basis.

Read: Noonan confirms Budget 2014 to be brought forward to October

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