IRISH PROSPECTS:THE PROSPECT of European leaders agreeing today to radical changes in the funding mechanism for countries in crisis was being downplayed by Government sources last night.
Several sources said there was strong political momentum behind the proposal to bring more flexibility to the European Financial Stability Facility but the emergency summit would be dominated by problems associated with the second Greek bailout.
On July 11th, finance ministers said they would “stand ready” to introduce measures that enhanced the flexibility of the funding mechanism.
Speaking on the eve of the summit, Minister for Finance Michael Noonan indicated that while the political decision had yet to be made by EU leaders, it would make the package much more affordable for Ireland.
“It has support at political level and we will have to wait and see if gets over the political line [at the summit],” he told RTÉ.
He also said he would like to see a situation where the EFSF in Europe would supply funds to the National Treasury Management Agency to buy sovereign bonds in the secondary market.
“You can look at the bond rates in Ireland and indeed across Europe at the moment and they are all at a discount,” Mr Noonan said. “If you could go in yourself and purchase them, you would be getting the write-downs and it would be costing a lot less for Ireland,” he added.
Mr Noonan said the debate had moved beyond a “Gallic spat” between Ireland and France. The change would not be a concession but rather a “repricing of a programme and an admission it was priced too high”.
In a reference to French demands for changes to Ireland’s corporation tax, he also insisted that no quid pro quo would be involved in the reduction.
However, even if partial agreement was reached, sources said, it would likely be September or October at the earliest before changes beneficial to Ireland and other programme countries could be put into effect.
Fianna Fáil’s public expenditure spokesman Michael McGrath said Taoiseach Enda Kenny had made contradictory statements on Ireland’s position: “There is clear confusion at the heart of Government on our negotiating position.”
