Ireland's bailout 'needs greater flexibility to speed recovery'

Ireland's bailout package should be made more flexible to help the Eurozone struggler recover faster from its crisis, Europe's top economics official said. In an article published in the Sunday Business Post, Olli Rehn called for the interest rates on Ireland's loans to be lowered and the debt maturity lengthened. "Ireland provides hard evidence that the EU-IMF conditional financial support approach is working," Rehn, the EU's economic and monetary affairs commissioner, wrote. "The efforts should be encouraged by lengthening the maturities of the loans and lowering the interest rates." Eurozone finance ministers agreed last week to lengthen the maturity of debt and lower the interest rate on loans from the European Financial Stability Facility (EFSF), the Eurozone's rescue fund, in an attempt to bring the bloc's debt crisis under control. Ireland is borrowing €17.7 billion (Dh65 billion) from the EFSF and €22.5 billion from the European Financial Stabilisation Mechanism (EFSM), the EU's rescue fund, as part of its €85 billion bailout. Ireland is contributing €17.5 billion of its own funds, and by 2013, interest repayments will swallow 20 per cent of tax revenues. The average maturity of the loans is seven-and-a-half years. Dublin has been asking for lower interest rates on its European loans for months but has faced opposition from France, which wants Ireland to raise its 12.5 per cent rate of corporation tax in return. Dublin has refused to bow to that demand. Last week, Finance Minister Michael Noonan admitted even with an agreement by Eurozone finance ministers to lower the average 5.8 per cent rate of interest on its European debt, Paris may still demand Ireland raise its corporation tax rate. Such a scenario would stymie any deal. From / Gulf News