DUBLIN--Ireland will launch a "coordinated diplomatic drive" with the European Union for a better deal on its international bailout package, Irish Deputy Prime Minister Eamon Gilmore said Sunday, but without specifying what savings he hoped to secure.
Gilmore told Irish broadcaster RTE Radio that Ireland will step up its negotiations by meeting EU foreign affairs ministers and ambassadors to explain its banking policy and to build support for a cut in the interest rate the country is paying on its EU bailout loans, part of a EUR67.5 billion deal Ireland struck in November with the EU and the International Monetary Fund.
"We are now in the process of negotiating a reduction in that interest rate," he said.
The Irish central bank disclosed Thursday that stress tests on four lenders--Allied Irish Banks, Bank of Ireland, Irish Life & Permanent and EBS Building Society--showed Ireland's stricken banking system required EUR24 billion more in capital. That could increase the total cost so far to Ireland of bailing out its banks to EUR70.3 billion, or about 44% of the annual output of its economy.
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Ireland's new Prime Minister Enda Kenny, left and coalition partner, Eamon Gilmore leave after a group photograph with newly-elected ministers at the Presidents House, in Dublin, on March 9, 2011.
Gilmore was appointed the country's deputy leader and foreign affairs minister after his junior Labour coalition party agreed last month to form a government with Fine Gael, led by Enda Kenny. Both parties had campaigned during elections for a cut in the cost of the bailout loans and for burden sharing with senior bank bond holders on the country's big banking debts.
But Finance Minister Michael Noonan said Thursday that opposition by the European Central Bank had prevented the new government from negotiating with senior bond holders.
Saturday, Brian Hayes, a junior minister in the finance ministry said the government would press for a lower interest rate on the European loans at looming EU meetings. Finance Minister Michael Noonan will meet his fellow EU finance ministers at the informal gathering in Budapest this week.
"It is a key objective for the government that we are trying to negotiate a lower interest rate on the EU part of the financial package," Hayes told RTE.
On Friday Standard & Poor's became the last of the three major rating agencies to strip Ireland of its 'A' rating. However, the one notch cut and stable outlook was less severe than feared and it gave the thumbs up to stress tests which on Thursday showed its four troubled banks needed a further 24 billion euros to be properly capitalised.
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