Tuesday, March 05 15:25:36
European finance ministers are to ask Ireland's Troika of lenders - the EU, ECB and IMF - to come up with options as to how Ireland's bailout loans can be extended.
Eurozone finance ministers last night agreed in principle to extend the deadline for Ireland to repay its bailout loans.
Both Ireland and Portugal want up to 15 more years to pay back loans to the EU to ease their return to financial markets, but sources said that while an extension is likely it may not be as long as they want.
The head of the Eurogroup meeting of finance ministers said he would ask non-euro European Union colleagues on Tuesday if they were willing to adjust the conditions of the loans the EU made to Ireland and Portugal.
"If there was to be an agreement tomorrow, we would ask the troika (of European Central Bank, European Commission and International Monetary Fund) to come forward with a proposal for the best possible option for each of these of the two countries," Jeroen Dijsselbloem said.
EU Commissioner Olli Rehn said he hoped the ministers could make a decision at the next Eurogroup and EU finance ministers meeting in Dublin in April.
EU governments are considering ways to help the two states, both bailout recipients, return to raising funds on the capital markets. Loans to both states came from the two rescue funds EFSM and EFSF.
This could be done by limiting the borrowing needed to cover big debt repayments in 2016 and 2021 for Portugal and 2016 and 2022 in Ireland.
A full return to markets by Dublin and Lisbon would be a success for the euro zone, which wants to show that bailout reforms can work, even though the sovereign debt crisis sent unemployment rocketing and led to an election standoff in Italy.
Approval of non-euro zone countries for the extension of the loan maturity for Portugal and Ireland is needed because both countries received loans from the European Financial Stability Mechanism (EFSM), a 60 billion-euro fund which raised money on the market against the security of the budget of the whole EU.
An extension of the EFSM loans will therefore have to be approved by all EU countries. Extending loans granted by the euro zone temporary bailout fund, the European Financial Stability Facility (EFSF), will require unanimous approval from all 17 euro zone governments that are shareholders in the EFSF.
Finance Minister Michael Noonan told reporters on Monday he was aware his demand may not be met fully.
"Our lowest maturities are five years and they extend out to the high 20s, so what we are asking is an extension of 15 years on average, but we will see how it goes," Noonan said.
"I don't think there is a disposition to extend that long," he added, speaking ahead of the ministers' meeting in Brussels.