EU looks to cut rates on Greek, Irish bailouts
By John O'Donnell and Stephen Brown |
May 10, 2011, Tuesday
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Print Edition
Print Edition
THE European Union is looking to lower interest rates on bailout loans to Greece and Ireland as well as working on a second rescue for Athens in a chaotic attempt to prevent a disorderly debt restructuring.
The European Commission, the executive arm of the EU, said yesterday it hoped to come to a decision within weeks on reducing the rate charged to Ireland to make Dublin's debt more sustainable.
"The commission is clearly in favor of a rate cut," a spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn said. "The commission is against debt restructuring."
The new Irish government's bid for lower interest payments has so far been blocked by Germany and France, which want Dublin to drop its veto on harmonizing the corporate tax base in Europe in exchange or raise its own low corporate tax rate.
In Germany, a senior lawmaker in Chancellor Angela Merkel's conservative party said a further cut in the rate on emergency loans to Greece, already reduced by one percentage point in March, would be justified if Athens carried out further reforms to trim its debt risk.
Michael Meister, finance policy spokesman of Merkel's Christian Democrats, told German radio he opposed any idea that Athens should restructure its debt or that it should consider leaving the eurozone.
However, German Finance Ministry spokesman Martin Kotthaus told a news conference: "There is no discussion at the moment about extending the payment schedule or lowering the interest rates for Greece.
The calls for lower interest rates came after a select group of top eurozone policymakers held not-so-secret talks in Luxembourg last Friday on how to stem the currency bloc's deepening sovereign debt crisis.
The European Commission, the executive arm of the EU, said yesterday it hoped to come to a decision within weeks on reducing the rate charged to Ireland to make Dublin's debt more sustainable.
"The commission is clearly in favor of a rate cut," a spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn said. "The commission is against debt restructuring."
The new Irish government's bid for lower interest payments has so far been blocked by Germany and France, which want Dublin to drop its veto on harmonizing the corporate tax base in Europe in exchange or raise its own low corporate tax rate.
In Germany, a senior lawmaker in Chancellor Angela Merkel's conservative party said a further cut in the rate on emergency loans to Greece, already reduced by one percentage point in March, would be justified if Athens carried out further reforms to trim its debt risk.
Michael Meister, finance policy spokesman of Merkel's Christian Democrats, told German radio he opposed any idea that Athens should restructure its debt or that it should consider leaving the eurozone.
However, German Finance Ministry spokesman Martin Kotthaus told a news conference: "There is no discussion at the moment about extending the payment schedule or lowering the interest rates for Greece.
The calls for lower interest rates came after a select group of top eurozone policymakers held not-so-secret talks in Luxembourg last Friday on how to stem the currency bloc's deepening sovereign debt crisis.
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