Tuesday

2nd Jun 2020

Ireland and Portugal get lower interest rates on bailouts

  • Irish PM Kenny says taxpayers will have to pay less (Photo: Council of European Union)

Ireland and Portugal on Thursday (21 July) were given longer deadlines and lower interest rates to pay back their loans under their respective EU-IMF bailouts, but eurozone leaders made it clear that no private investors will be involved in their rescue, as it is the case with Greece.

Similarly to Greece, both Ireland and Portugal will be given 15 to 30 years to repay their loans, as opposed to the current 7.5 year-deadline and their interest rate will be lowered to around 3.5 percent.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Leaders however drew a clear distinction between the one-off private sector involvement in the Greek case and the other eurozone countries under an EU-IMF bailout, an attempt to stem the downgrading spiral by ratings agencies that both Ireland and Portugal have been drawn into.

Saluting the "robust" response of the eurozone leaders, Portuguese Prime Minister Pedro Passos Coelho said that the new deal will allow Portugal and Ireland to see "increased the conditions for success" and calm markets.

The recent downgrade to 'junk' status by Moody's ratings agency - both for Portugal and Ireland - was made because the agency feared the private sector would be involved in other bailouts as well.

"It was very important that the eurozone countries agreed that the Greek situation is unique and has no parallel in any other European country, like Portugal and Ireland," Coelho pointed out.

Meanwhile, Irish Prime minister Enda Kenny welcomed having obtained the same loan conditions as his Greek and Portuguese colleagues.

"The conclusions of today's meeting of leaders mark a significant improvement in the programme of support and ultimately it reduces the cost of our debt, thereby lightening the burden on the taxpayer," Kenny told reporters at the end of the meeting.

He estimated that the lowering of the interest rate by two percent "should be worth the order of between €600 to €800 million a year."

Despite reassurances by Kenny that Ireland did not to make any concessions on its low tax corporate rates, the final conclusions of eurozone leaders "note Ireland's willingness to participate constructively (...) in the structured discussions on tax policy issues."

To International Monetary Fund chief Christine Lagarde, the "crucial" element agreed on Thursday was that eurozone leaders decided to prop up countries under existing bailout programmes "until they regain market access".

This would open the way for further financial assistance down the line, possibly under a standby loan that the EU bailout fund would be able to give out under its new powers, modelled on the IMF.

Ratings agency says EU bailout deal at risk

Ratings agency Moody's has warned the EU's new bailout package for Greece could unravel over demands for loan collaterals. EU anti-crisis measures are also facing fresh political risks in Germany and Italy.

Vestager hits back at Lufthansa bailout criticism

Commission vice-president in charge of competition Margarethe Vestager argued that companies getting large capital injections from the state during the corona crisis still have to offset their competitive advantage.

News in Brief

  1. Trump threatens to use army to crush unrest in US
  2. Trump wants Russia back in G7-type group
  3. Iran: Fears of second wave as corona numbers rise again
  4. WHO: Overuse of antibiotics to strengthen bacterial resistance
  5. Orban calls EU Commission recovery plan 'absurd'
  6. ABBA's Björn new president of authors' rights federation
  7. Malta and Libya to create anti-migrant 'units'
  8. France reopening bars and parks next week

Stakeholders' Highlights

  1. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  2. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  3. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  4. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  5. UNESDACircularity works, let’s all give it a chance
  6. Nordic Council of MinistersNordic ministers call for post-corona synergies between economic recovery and green transition

Latest News

  1. Malta fiddles on migrants, as Libya burns
  2. Borrell: EU doesn't need to choose between US and China
  3. Post-Brexit and summer travel talks This WEEK
  4. State-level espionage on EU tagged as 'Very High Threat'
  5. Beethoven vs Virus: How his birthplace Bonn is coping
  6. EU's new migration pact must protect people on the move
  7. Spain takes 'giant step' on guaranteed minimum income
  8. Vestager hits back at Lufthansa bailout criticism

Join EUobserver

Support quality EU news

Join us