We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Julien Behal/PA Wire/Press Association Images

New government could review EU-IMF deal: Lenihan

The Minister for Finance has agreed with the governor of the Central Bank that a renegotiation of measures included in Ireland’s bailout deal is possible – but has said this would not extend to the size or timeline of the agreement.

MINISTER FOR FINANCE Brian Lenihan said last night that measures included in Ireland’s €85 billion deal with the EU and IMF could be changed, following suggestions by Central Bank governor Patrick Honohan that the terms could be renegotiated.

The Irish Times reports that Honohan said a new government would have “quite a lot of flexibility” in moving away from measures already agreed – so long as any new policies had the same impact on state finances.

Lenihan agreed that changes to the deal could be brought in by a new government, but said the “size and speed of the budgetary adjustment is not open for discussion”. He added that altering the 5.8 per cent average interest rate on loans already drawn down was another “cannot be negotiated for Ireland in isolation and must be seen in the wider context”, RTÉ reports.

The Irish Times quotes Patrick Honohan as saying that measures set out as part of the Four Year Plan for the years following 2011 were “much less specific” than the current year – meaning that appropriate alternative measures “would receive a sympathetic hearing from the funders.” However, he cautioned that an effective bank restructuring would require that the fortunes of the banks and the budget be “convincingly disentangled,” adding, “Uncertainty about each damages the other”, the Wall Street Journal reports.

Opposition parties have welcomed Honohan’s comments. Fine Gael’s spokesman for finance Michael Noonan said that there was “quite a lot of scope” for change, and that he had already been assured by EU commissioner Olli Rehn and the IMF’s Ajai Chopra that  renegotiation was an option.

Labour’s Joan Burton said that “the first and most important job of a new government will be to produce a better arrangement with the IMF”.