EU/IMF interest rate reduction demonstrates that Irish debt levels are unsustainable
Commenting on speculation that the European Commission and European Central Bank are considering lowering the interest rate charged to the Irish state on loans provided under the EU/IMF austerity programme, Sinn Féin Finance Spokesperson Pearse Doherty has said that ‘this demonstrates that both the ECB and European Commission believe that the current levels of debt held by the Irish government are simply not sustainable.
Deputy Doherty said:
“Throughout the night there was wild speculation that senior EU and ECB leaders were meeting in secret in Luxembourg to discuss the probability of a Greek default on their EU/IMF debt.
“This morning it has emerged that the secret meeting also discussed the need to lower the interest rate charged to the Irish government for the EU component of the EU/IMF austerity loans.
“While no formal decision has yet been taken it is widely expected that some reduction in the interest rate will be agreed in advance of the upcoming European Council Finance meeting on May 17.
“If this speculation is true then it demonstrates that both the ECB and the European Commission believe that current levels of debt held by the Irish government are simply not sustainable.
“Sinn Féin has been making this point for some time. With the current Debt to GDP ratio at 100% and likely to rise above 120% by 2014 there is simply no way that the Irish government can hope to repay these loans.
“However a 1% reduction in the interest rate will not make the situation any better. It will amount to a reduction in debt servicing of at most €400 million a year which will have little or no impact on the overall debt to GDP ration.
“The politics of denial currently being practiced by the Government are no longer credible. The economic crisis will not be resolved with more bank bailouts and increased austerity.
“We need to abandon this disastrous EU/IMF austerity programme and secure a new deal based on returning private banking debt to private banks and investing in job creation.” ENDS