Ireland pays a substantially higher rate of interest on its bailout than Greece, but economists cast doubt on the country getting any further relief.
Finance Minister Michael Noonan has said that he would support a debt reduction for Greece, currently struggling to meet the troika’s austerity conditions.
Athens has been promised that eurozone finance ministers will look at the issue of the economy’s ability to meet it debt level with a review to giving them further debt breaks.
Klaus Regling, managing director of the EU’s ESM bailout fund, has reiterated this commitment given in November 2012, but pointed out it is dependent on the country implementing the measures agreed with the troika.
“There is already a commitment of the euro area, dating from late 2012, to take a look at debt sustainability in Greece if the country implements all agreed reforms. This may happen,” he said.
If Greece continued its reforms and implemented the measures agreed with the troika, he said: “It could open this discussion for some — and I want to emphasise some — additional debt relief, because a lot has happened already,” he told the Portuguese publication, Diario Economico. Greece, by far the largest of the fund’s creditors holding 44% of total Greek public debt, received a substantial haircut of more than 50% of the debt in 2012.
The maturities were lengthened, the interest rates were lowered and interest payment was deferred for 10 years. The savings, said Mr Regling, are more than 4.5% of GDP a year.
“This is already a substantial contribution for Greece to return to debt sustainability. I don’t think a lot is needed on top of that,” he added.
German-based economist Andrew Watt said that Ireland is paying around 3.5% interest on its loans, which is considerably more than the 2.5% Greece is paying. Before the Greek debt was restructured and Ireland’s was reduced, both were paying around 4.5%.
“You could make that argument in favour of making Ireland’s debt more sustainable — but I would be cautious about that….the Irish economy is growing reasonably quickly and I guess the Irish debt dynamics would not look too bad because the country is growing,” said Mr Watts, who works with the Hans-Böckler-Foundation.
In the latter part of the crisis, quite a lot of good things were done in Ireland, he said, and because the country had a very big trade surplus it was a very different case to Greece.
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