The European Union’s most powerful economist has backed Ireland’s call for a reduction in the interest rate on the EU-IMF bail-out - a move welcomed by the Irish government.
Ollie Rehn, economics commissioner with the EU, has officially endorsed efforts by the Irish government to negotiate a reduction in the interest rate charged on the $120billion package.
Writing for the Sunday Business Post, Rehn also claimed that Ireland should be given more time to pay back the loans available to it from the EU-IMB funds in the wake of the country’s current economic woes.
Commissioner Rehn acknowledged that the Irish government and people are working hard to puts it house in order.
“Ireland’s economic recovery would be sped up by more forgiving conditions on repaying the bailout,” wrote Rehn.
“Ireland is putting its house in order and fulfilling all the conditions necessary to restore confidence in its public finance and in its financial sector.
“Ireland provides hard evidence that the EU-IMF conditional financial support approach is working.
reland is recovering and implementing measures that will put its overall debt on a downward path in less than two years.
“Efforts to return to the markets are being delayed in an unjustifiable way by knock-on effects from the euro crisis in Greece.
“But the consolidation of Ireland’s public finances proceeds with determination. The reduction of public expenditure and tax increases are significant.”
Rehn likened Ireland’s current problems to the decline suffered by Finland in the early 1990s.
The Finns responded with ambitious cost-cutting which led to an export-led recovery and a new era of competitiveness.
The Irish government has welcomed his remarks ahead of a meeting of EU leaders this week.
Prime Minister Enda Kenny is expected to discuss an interest rate cut with his European counterparts at the meeting.
Kenny’s deputy Eamon Gilmore said: “I think there is a general acceptance now among European governments that this is a European problem.
“It has to be dealt with at a European level. I believe that that will work to Ireland’s advantage because solving the European problem will help solve the Irish problem.”