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04/03/2011
IMF Announce Interest Cut For Ireland
Despite an announcement to the contrary by the German Chancellor on Thursday, Ireland's bailout interest rate is set to decrease.
The news comes only a day after Angela Merkel had ruled out lowering the huge interest rate facing Ireland over its international bailout conditions.
The International Monetary Fund has now said the interest rate Ireland will pay as part of the €85 billion IMF/EU rescue package will be reduced.
The reduction is part of technical changes in IMF 'quotas', or the relative rates assigned to economies according to their size, and will mean a fall by 19 basis points in the interest Ireland has to pay on much of its €22.5bn IMF debt.
The complicated changes will equate to roughly a reduction by 0.1% for debt outstanding less than three years, and 0.2% on debts outstanding longer than three years.
IMF Managing Director, Dominique Strauss-Kahn said the changes "will represent the most fundamental governance overhaul in the IMF's 65-year history" and were the biggest-ever shift of influence in favour of "emerging market and developing countries".
The adjustments are extremely timely as on Wednesday Chancellor Merkel, who was one of the architects of the EU and International Monetary Fund (IMF) bailout for Ireland, said it was "unlikely" she'd agree to cut interest rates on rescue loans to Ireland and Greece.
According to financial newsgroup Bloomberg, the source of the information came from anonymous officials that attended the closed-door meeting. The officials said that Ms Merkel also planned to levy a number of extra conditions aimed at keeping pressure on each country to curb spending.
Fine Gael Leader and Taoiseach in waiting, Enda Kenny, targeted a cut the rate on emergency loans during his election campaign and is preparing for talks on Friday with Ms Merkel and European allies in Helsinki.
Mr Kenny and Greek Prime Minister George Papandreou both visited Merkel in Berlin last month to canvass support for a cut in the interest rates.
However, speaking on Wednesday night, Ms Merkel stood strong saying: "We can't artificially lower interest rates. They are ultimately an expression of confidence in a country.
"We can't get to a point where Ireland pays lower interest rates than Portugal."
Mr Kenny is seeking to lower the 5.8% interest rate on aid loans agreed by Fianna Fail during their negotiations with the European Union and the IMF. Mr Kenny also wants to end the protection of senior bank bondholders.
(DW)
The news comes only a day after Angela Merkel had ruled out lowering the huge interest rate facing Ireland over its international bailout conditions.
The International Monetary Fund has now said the interest rate Ireland will pay as part of the €85 billion IMF/EU rescue package will be reduced.
The reduction is part of technical changes in IMF 'quotas', or the relative rates assigned to economies according to their size, and will mean a fall by 19 basis points in the interest Ireland has to pay on much of its €22.5bn IMF debt.
The complicated changes will equate to roughly a reduction by 0.1% for debt outstanding less than three years, and 0.2% on debts outstanding longer than three years.
IMF Managing Director, Dominique Strauss-Kahn said the changes "will represent the most fundamental governance overhaul in the IMF's 65-year history" and were the biggest-ever shift of influence in favour of "emerging market and developing countries".
The adjustments are extremely timely as on Wednesday Chancellor Merkel, who was one of the architects of the EU and International Monetary Fund (IMF) bailout for Ireland, said it was "unlikely" she'd agree to cut interest rates on rescue loans to Ireland and Greece.
According to financial newsgroup Bloomberg, the source of the information came from anonymous officials that attended the closed-door meeting. The officials said that Ms Merkel also planned to levy a number of extra conditions aimed at keeping pressure on each country to curb spending.
Fine Gael Leader and Taoiseach in waiting, Enda Kenny, targeted a cut the rate on emergency loans during his election campaign and is preparing for talks on Friday with Ms Merkel and European allies in Helsinki.
Mr Kenny and Greek Prime Minister George Papandreou both visited Merkel in Berlin last month to canvass support for a cut in the interest rates.
However, speaking on Wednesday night, Ms Merkel stood strong saying: "We can't artificially lower interest rates. They are ultimately an expression of confidence in a country.
"We can't get to a point where Ireland pays lower interest rates than Portugal."
Mr Kenny is seeking to lower the 5.8% interest rate on aid loans agreed by Fianna Fail during their negotiations with the European Union and the IMF. Mr Kenny also wants to end the protection of senior bank bondholders.
(DW)
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