Negotiations on a reduced bailout interest rate for Ireland are progressing well, Minister for Finance Michael Noonan said today.
It is hoped that an agreement on the EU-IMF interest rate can be reached at official level around the same time as a “deal is being done” with Portugal, Mr Noonan said after presenting the results of the first review of Ireland’s rescue deal.
He said that significant progress had been made on the interest rate issue in Budapest at an informal meeting, and that it would be taken up again at up at an Ecofin meeting in May.
“After speaking with finance ministers in France and Germany, they have agreed a process with me,” he said. Officials will now work on coming up with a joint position on the interest rate.
“It’s a work in progress. We’re keeping [EU economics commissioner] Olli Rehn and his commission colleagues informed on that. So it’s going well,” he added.
The Minister also announced the Government has decided to scrap the ‘Nama 2’ scheme, which would have seen land and development loans of less than €20 million transferred to the State’s so-called ‘bad bank’
Originally Nama was to acquire all land and development loans valued above €5 million from Bank of Ireland and AIB, but this was increased last September to €20 million. However in January a new bill was published to allow for the transfer to Nama of loans previously excluded on the basis that they were valued below this €20 million threshold.
Mr Nonnan said the international agencies have agreed with the proposal not to go ahead with Nama 2. Instead the banks will deleverage these loans at the same pace as the deleveraging already announced in the Government’s recent bank restructuring programme.
According to Mr Noonan, European officials had not understood how “scattered” the properties relating to these loans were around the country. The properties are “not as centralised as they would have experience of”, he said. When the situation was explained, the officials agreed with the Government’s decision on Nama 2.
“They agree there is a better way of doing things," he said.
