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Eurogroup only dealing with half the problem – Doherty

12 July, 2011 - by Pearse Doherty TD

Speaking in response to last night’s statement by the Eurogroup Sinn Fein Finance spokesperson Pearse Doherty has said that ‘the Eurogroup is only focusing on half the problem.’ Deputy Doherty also accused the Eurogroup and the Government of ‘running scared of imposing losses on senior bondholders.’

Deputy Doherty said:

“Last nights statement by the Eurogroup demonstrates that the Eurozone Finance Ministers are only focusing on half the problem. Proposals to consider enhancing the flexibility of the EFSF and lowering interest rates are to be welcomed if they lead to a reduction in the debt burden of Ireland and other struggling economies.

“Unfortunately yesterday’s statement does not represent an agreement on either of these issues. Rather it only signals the group’s willingness to agree these matters at some unspecified point in the future. It also lacks any detail on how these changes to the current policy would actually work and whether they would lead to a reduction in Ireland’s debt burden. I am also concerned with what conditions may be attached to these measures.

“Considering the scale of the crisis now facing the Eurozone, with Italian and Spanish bond yields fast approaching unsustainable levels, yesterday’s Statement falls far short of the decisive action that is required.

“It is clear that the Eurogroup and the Irish government have yet to accept that the central problem for Ireland is the massive amount of private banking debt being carried by the taxpayer.

“Any reduction in the interest rate charged on the EFSF would be welcome. However the total saving to the state from a 1% cut in this rate would only reduce the states debt burden by a fraction of a per cent.

“The Government and the Eurogroup are running scared of imposing losses on senior bondholders. The Government need to put the issue of burden sharing front and centre in all discussions with the European Council and the Eurogroup. The only way for Ireland’s debt to become manageable is if the burden of private banking debt is taken off the shoulders of the taxpayer.

“It is becoming increasingly clear that the current approach of the EU is not working. We need a new EU wide debt resolution programme which assists member states to reduce levels of debt one the one hand while assisting them to stimulate their economies on the other.” ENDS

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