The man in charge of Germany’s finances has told Ireland’s taxpayers to forget about any bank debt burden relief in October.
German Finance Minister Wolfgang Schauble has effectively ended any hope of another EU package to aid Ireland’s ‘massive’ $100 billion bank debt. It means Ireland will not get new and favorable terms like Spain did recently.
Irish Prime Minister Enda Kenny had hoped to re-structure the debt by October in agreement with his EU counterparts.
But Schauble has ruled any new deal out as he believes any Irish debt-relief proposal sends a negative signal to financial markets, according to the Irish Times.
The paper reports that Schauble has said Ireland’s ‘massive’ reform progress should not be compromised by anything that would halt the ‘winning back of trust’.
He added: “We cannot do anything that generates new uncertainty on the financial markets and lose trust, which Ireland is just at the point of winning back.
“Naturally we want to help each other but I am not yet convinced, by any means, that some of the measures which are mentioned would not have the opposite effect.”
Kenny has ordered government officials to tour European capitals next week to garner support for a new approach to Ireland’s debt relief issues.
EU leaders had agreed in June to review the Irish problem after bailing out the Spanish banks.
Kenny had claimed that the deal would relieve the burden on the Irish tax-payer but the Germans are clearly opposed to any such measure.
The Irish Times reports that Schauble agrees that lower interest rates showed markets were honouring Irish reform efforts but he claimed there is a risk that markets would take a negative view of the need for further funding for Ireland.
The German Minister said: “We will have to avoid generating a headline like ‘Aid programme for Ireland topped up’, because then investors in California or Shanghai might not understand that this top- up is a reward for Ireland, but might be tempted to conclude that what was agreed two years ago for Ireland was not enough. And that is surely not what we want.”
Finland and Holland are also opposed to any new deal for Irish debt.
Schauble said: “It’s not about the German federal elections. We don’t want that Ireland does worse but that the winning back of trust continues. That is the measure of all decisions we will take.”