Irish government ministers have admitted to ‘difficulties’ in their bid to renegotiate the terms of the bank bailout deal with the European Central Bank.

Deputy Prime Minister Eamon Gilmore has warned the ECB that a failure to negotiate a better deal will be ‘potentially catastrophic’ for the Irish economy.

Fine Gael Minister Leo Varadkar has rejected suggestions that the ECB have already turned down the government’s request for easier terms on the repayment of promissory notes.

But he conceded to the Irish Times that the Coalition has to change some of its proposals to avoid punitively high repayments for the former Anglo Irish Bank.

As it stands the Irish Government must pay $4 billion every March until 2023 to cover losses at the failed bank.

Transport and Tourism Minister Varadkar has denied reports that the ECB had rejected Ireland’s proposal for a longer repayment schedule.

The Dublin deputy said in an interview with Irish state broadcaster: “There was no rejection. There was no breakdown. There are issues that need to be changed. And issues that need to be agreed on.

“There is agreement in a lot of areas, but there are a number of issues outstanding and some of those issues are very difficult . . . We need to work on them but we are still very hopeful of getting a resolution.”

A spokesman for the ECB told The Irish Times that it is ‘premature’ to refer to any outcome and that talks on this issue were ongoing.

Labour Party leader Gilmore meanwhile told a gathering of EU and Latin American leaders in Santiago that Ireland’s expected exit from the bailout programme this year is dependent on an agreement to lower the country’s debt burden.

German chancellor Angela Merkel was amongst the crowd addressed by Gilmore.

He said: “By shouldering a great burden of debt Ireland has shown solidarity with Europe when the risk of contagion was high.

“A deal on lowering the burden now requires a greater reliance on that solidarity that underpins the union.”

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