Ireland welcomes new bailout fund rule change
A TECHNICAL change in the rules of the EU’s new permanent bailout fund announced yesterday will make it easier for Ireland to return to the markets for cash, according to Irish finance minister Michael Noonan.
EU policymakers had previously discussed giving the €500bn (£441bn) European Stability Mechanism (ESM), a permanent bailout fund that will be created in June 2013, “preferred creditor status” in the event of a default by Ireland, Portugal or Greece.
That would have put the ESM at the front of the queue of creditors if any of the bailed-out nations fails to pay back their rescue loans. The proposal was set to raise its borrowing costs because private investors were worried at being put to the back of the line.
But Eurogroup president Jean-Claude Juncker said yesterday: “The ESM will not have preferred status as regards loans for countries that are already in the support programme, in other words Portugal, Ireland and Greece. This should make it easier for those countries to come back to the markets.”
Noonan agreed, saying: “The change makes it possible now for Ireland to go back into the markets and be sure that there are people there who will lend us money.”