Barroso pressed for cut in interest


European Commission president Jose Manuel Barroso is being pressed for a cut in Ireland's bailout interest rate (AP)

Fine Gael is expected to press European Commission president Jose Manuel Barroso for a reduction in the interest rate on Ireland’s international bailout funds.

Party leader Enda Kenny and finance spokesman Michael Noonan will discuss the EU/International Monetary Fund rescue package when they meet the top politician in Brussels.

Mr Noonan has warned that Ireland may not be able to repay the European portion of the loans unless new terms are negotiated.

Mr Kenny said: “Fine Gael in government is committed to changing the policy measures contained in the EU/ECB/IMF funding programme and to negotiating with our European partners to reduce the penal interest rate that Ireland is being charged.

“We look forward to discussing these and other issues with president Barroso.”

Some 22.5 billion euro of the 85 billion euro package will come from the European Financial Stability Mechanism (EFSM) at a rate of 5.7%.

Another 22.5 billion euro will come from a separate EU pot, the European Financial Stability Fund (EFSF), and loans from the UK, Sweden and Denmark.

The bilateral loans and the EFSF portion of the bailout will each charge a 6.05% interest rate.

In an interview with the Financial Times, Mr Noonan said Ireland was paying too much on the EFSF side of the loan.

Finance Minister Brian Lenihan discussed cutting the interest rate on the bailout loans with EU counterparts last week.

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