The Irish government has been forced to concede it can no longer demand a one percent drop in the interest charged on the EU/IMF bail-out.
Prime Minister Enda Kenny had to make the embarrassing admission in the Irish parliament on the back of French resistance to any cut.
Kenny has now admitted that the best the Irish government can hope for is a smaller reduction and only on the money it has yet to draw down from the rescue package after the collapse of the Celtic Tiger.
Opposition parties have rounded on Kenny and his Minister for Finance Michael Noonan, branding the admission a u-turn and claiming it is tantamount to a tacit acceptance that a cut is no longer achievable.
Kenny had told the Irish parliament that the maximum savings the Government could now achieve from an agreed interest rate cut with the EU and the IMF is €150 million per annum, way below the €400million savings on a one per cent cut.
He also admitted that any cut would not apply to the €15 billion in European loans already drawn down but only to the €24.6 billion remaining.
Department of Finance Junior Minister Brian Hayes has also confirmed that the Government looked for a 0.6 per cent reduction during the negotiations with the EU and the European Central Bank.
Prime Minister Kenny also repeated earlier claims by Finance Minister Noonan that his government was not prepared to negotiate an interest rate at the cost of the corporate tax rate.
“It is unfair that some countries are seeking extra conditions to be imposed on Ireland in return for an interest rate cut,” said Kenny to reference to demands from the French for an increase in Ireland’s corporate tax rates.