Ireland and Portugal set for debt deferral
By Benjamin Fox
Ireland and Portugal are to be given more time to repay their emergency loans with both countries seen as good pupils in following the imposed austerity programme.
An EU finance ministers meeting Tuesday (5 March) noted that "both countries have taken successful steps to re-enter the markets."
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They discussed how best to help the two countries to "exit" their bailout programmes.
Officials from the European Central, European Commission and the International Monetary Fund - the so-called Troika - will now discuss how to "smooth" their debt repayments.
EU economic affairs commission Rehn said he was "confident" Ireland would leave its adjustment programme in autumn 2013 and Portugal in spring 2014.
He also claimed that national parliaments across the EU could be "convinced on the merits of the assessment of the longer maturities" on the grounds that "it is very much in the European interest, and the interest of each member state, that both Ireland and Portugal will successfully exit the programme and regain market funding.”
Irish finance minister Michael Noonan was more circumspect, commenting that there were "a range of options still in the paperwork provided by the commission.”
Ireland and Portugal want to push back the maturity of loans by up to fifteen years to help ease the repayment pressure although EU sources have indicated an average extension period of five years.
The two countries have received bailout packages worth €67.5 billion and €78 billion respectively.
Both countries are keen to return to financing themselves on the international debt markets.
Ireland was pushed into difficulties in 2010 following the collapse of Anglo-Irish bank and the Bank of Ireland, causing its budget deficit that year to reach a massive 30 percent.
The debt deals have pushed the debt-to-GDP ratio up to nearly 120 percent in both countries.
However, Ireland is now among the better economic performers in the eurozone. The Commission's Winter Forecast, released in February, predicted that Ireland's economy would continue its recovery in 2013 and 2014 with GDP growth of 1.1 percent and 2.2 percent respectively.
Portugal, however, remains mired in recession, with its economy expected to contract by a further 1.9 percent in 2013.