Last night in the European Parliament, Strasbourg, the Economics and Monetary Affairs Commissioner Olli Rehn provided a comprehensive note to Pat the Cope Gallagher MEP, Jim Higgins MEP and Gay Mitchell MEP on the possibility of a Ireland securing a renegotiation of the EU-IMF agreement.
 
Pat the Cope Gallagher MEP said today “I welcome Commissioner Rehn’s firm commitment to support a reduction of the interest rate margin on the EU portion of the loan package. However, the incoming Government must tread carefully as elements within the Council and Commission may seek an increase in our corporation tax rate as part of new measures on economic convergence in the euro area.”
 
The detailed note states the following:  
 
– As to the scope for modifying the EU-IMF financial assistance programme, the main elements or goalposts of the programme should not be renegotiated.
 
– The Commission supports a reduction of the interest rate margin on the European portion of the borrowing.
 
– This would have to be viewed in the context of a comprehensive package, which will have to include progress on economic governance in the euro zone, the new European Stabilisation Mechanism and the adjustment measures by Member States.
 
– On debt sustainability, the note states that assuming that the programme measures and reforms are implemented, Ireland’s public debt is sustainable based on realistic macroeconomic and growth projections of the EU and IMF and the Irish public debt is forecast to set on a declining path starting in 2013/14. Such a turnaround would facilitate a reduction in Ireland’s risk premium and thus on the overall cost of financing its debt.