Ireland is no longer seeking further debt relief from its European partners, Minister for Finance Michael Noonan has said, as he arrived in Brussels on Monday for a key eurogroup meeting on Greece.

Discussions on granting debt relief for Greece – which is likely to involve an extension of loan maturities or a reduction of interest rates – are due to begin in earnest on Monday, with the IMF insisting that reducing the country’s debt burden is a precondition for its participation in the third Greek bailout.

While Ireland had been targeting debt relief through direct recapitalisation of Bank of Ireland and AIB by the ESM fund, the euro zone’s bailout fund, Mr Noonan said that this mechanism was no longer being sought.

“We’ve got what we wanted. No one would look for direct recapitalisation now because the issues have moved on and I’ll remind you we got not only extension of maturities on two occasions, and reduced interest rates but we refinanced with the IMF as well.”

Projections

He said that while the projections for Ireland three years ago was that Ireland would be paying about €11 billion in debt servicing costs at this stage, the cost was now around €6 billion.

“We’ve made significant process , we’re doing quite well. Our debt is down to about 94 [per cent of GDP] at the end of last year , we’re predicting by the end of this year we’ll be under 90, maybe 87/88 is the latest figure.”

He added that international interest rates are at an all time low while quantitative easing is helping all countries including Ireland.

“It’s not that we’re not interested in reducing the debt burden further, it’s just that the things that we tried three or four years ago are no longer relevant.”

On Greece, Minister Noonan said Ireland’s position was that it was opposed to a nominal debt cut for the country, but supported other debt relief measures.

“The Irish position has been clear for at least two or three years, that we don’t agree with nominal write offs on the debt, but we will favour a relief of their repayment capacity by extending maturities and reducing interest rates.”

He said that while he expected a preliminary discussion on debt relief for measures for Greece at Monday’s meeting, there would be “no hard and fast conclusions” with further progress expected at the eurogroup on May 24th. He noted that, under the terms of the Greek bailout agreed last year, the eurogroup only consented to consider debt relief after the first review was completed.

Review

Six months after it was initially expected to be completed, the first review under the third Greek bailout has yet to be concluded, although the Greek Parliament late on Sunday night passed a series of new cuts which it hopes will lead to the completion of the first review and the release of more than €5 billion in bailout money.

Arriving at the meeting, German finance minister Wolfgang Schauble also said he did not expect a final decision on debt relief for Greece today.

European Commissioner Valdis Dombrovskis said that, while debt relief would be discussed, it was up to the eurogroup of finance ministers who are Greece’s main creditors to decide on the question of debt relief, not the European Commission.

Also under discussion at Monday’s eurogroup will be an extra set of austerity measures that Greece’s lenders are demanding that would be triggered in the event of Greece meeting its budget targets in 2018. The idea of a “contingency package” emerged last month as a way of bridging divisions between the European Commission and the IMF on growth projections for Greece in the coming years. While the European Commission predicts that Greece will deliver a primary surplus of 3.5 per cent by 2018, the IMF believes that the current measures will only yield a surplus of 1.5 per cent. But the Greek government has said that it may prove impossible to ask legislators to back further austerity measures.

Austerity

While the Greek parliament backed more austerity measures in a vote late on Sunday night, Mr Tsipras has a slim majority, with his government controlling 153 seats in the 300-seat Parliament.

Minister Noonan welcomed the announcement by AIB this lunchtime that it is to cut standard variable mortgage rates. But asked if other banks should follow suit, he said he did not want a model where banks cut their rates simultaneously. “The model we’re aiming at is a competitive model, so you don’t want a situation where everybody moves together. We want to get the banks competing with each other... but we’ll continue to keep the pressure on.”

Budget

On the government’s projected spending in the coming years as outlined in the programme for government agreed last week, Minister Noonan said that the European Commission had already redefined its requirements for a balanced budget for Ireland earlier this year.

He said that the figure of €6.75 billion in public spending between now and 2021 included in the Programme for Government was the same as was set out in the Fine Gael general election manifesto. “We haven’t moved it. The composition may have moved about a little, but not significantly, so we’re operating within the fiscal space available. We have agreement on that, both with Fianna Fail in terms of their support for a minority government and with the Independents that are now participating in government. “