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Olli Rehn says Ireland should get cut in bailout rate

The EU’s Economic and Monetary Affairs Commissioner tells Strasbourg press conference that Ireland should get a cut in its bailout interest rate.

Image: Yves Logghe/AP/Press Association Images

GOOD NEWS FOR Ireland – the much-discussed drop in the interest rate being paid on the EU/IMF bailout should be hovering into view by next week.

Olli Rehn, European Commissioner for Economic and Monetary Affairs, told a press conference in Strasbourg, France today that he expects that a reduction of the interest rate for Ireland is on the cards.

Reuters have reported from the conference that he said:

In my view, for good reasons, the focus of the interest rate should be less related to so-called moral hazard, and essentially related to debt sustainability. The moral hazard problem is tackled by rigorous conditionality of the programme and I don’t see that any leader of an EU member state would voluntarily want to be in an EU/IMF programme.

Meanwhile, it is important that in defining the interest rate, debt sustainability is firmly taken into account and therefor the Commission has already some time ago proposed that we would have a reduction of the interest rate for Ireland, in order to help Ireland to overcome its debt burden, in the same way as Greece, or now Portugal, and I would expect that this kind of an agreement could be taken shortly.

This is of course again a matter for the EU member states to decide.

Rehn also spoke on the Portugese and Greek bailout deals, saying that he hopes Finland can support the EU/IMF programme for Portugal. He said that he saw the interest rate as being somewhere between 5.5 and 6 per cent.

He also said that it is “too early” to look at the potential need to refinance Greece in 2012. He added:

It is precisely the task of our EU mission now in Athens to specify and concretise the needs for next year and we will have a chance to have a well-informed discussion – and I trust subsequently decisions – on this issue, in coming weeks.

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