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Irish govt denies Spain has better bailout deal

11 June 2012, 22:11 CET
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(DUBLIN) - The Irish government on Monday dismissed claims from an opposition party that Spain was getting a better bailout deal than Ireland secured for its own rescue package in 2010.

Prime Minister Enda Kenny said Spain's 100-billion-euro ($125-billion) deal to help troubled banks was marginally different from the deal granted to Ireland, but denied claims from Sinn Fein that it was on more generous terms.

"The deal in Spain is slightly different than Ireland's in that a number of years ago Ireland was put into a package which dealt both with the bank recapitalisation and the running of the country," Kenny said.

"In Spain's case it is recapitalisation money for its banks.

"Spain has got to pay the same interest rate as Ireland in that regard and will have to underwrite that.

"Spain have to deal with their reduction to 3.0 percent (of GDP) by next year, Ireland has a further year to do that," Kenny said.

He was referring to a pledge by Spanish authorities to bring their public deficit down to the eurozone ceiling of 3.0 percent of output by 2013, though the European Commission might push the deadline back to 2014 as well.

Meanwhile, junior finance minister Brian Hayes said claims from Sinn Fein, the second biggest opposition party in the Irish parliament, that the interest rate for Spain's bank rescue funds would be 3.0 percent compared with 3.7 percent for Ireland's loans were "fundamentally a lie".

"They got the exact same deal that we have -- a memorandum of understanding will be put in place, the troika will be put in place," Hayes told RTE radio.

German Finance Minister Wolfgang Schaeuble confirmed Monday that the Spanish deal would be overseen by a so-called troika of staff from the European Union, the European Central Bank and the International Monetary Fund.

The European Commission, the EU's executive arm, said Monday the deal would be overseen by a quartet, which would include the European Banking Authority (EBA).

Ireland secured an 85-billion-euro rescue deal from the European Union, the ECB and the International Monetary Fund in November 2010, but it came with stringent conditions attached to the country's fiscal policy.

The deal is subject to three-monthly reviews by officials from the three organisations.

The Irish government has made clear in recent weeks that it wants to re-negotiate the part of the deal that concerns Ireland's bank debt.

Deputy Prime Minister Eamon Gilmore said after Ireland voted in favour of a new EU fiscal pact in a referendum on June 1 that the government sought to "secure a more sustainable long-term deal in relation to Ireland's bank debt".

European government sources confirmed to AFP after a teleconference of eurozone finance ministers at the weekend that Ireland wanted to renegotiate its bailout in light of the deal secured by Spain.

"Ireland raised the need to ensure parity with Spain (retrospectively) on its bailout from EFSF," one source told AFP, referring to the temporary rescue fund, the European Financial Stability Facility.

An Irish government source said Finance Minister Michael Noonan had emphasised "the need to build new 'flexibility' into the ESM (the incoming rescue fund, the European Stability Mechanism) to deal with funding issues affecting non-sovereigns".

Hayes said Noonan had stressed after the teleconference that if Spain were given a better deal than Ireland "we will be demanding that we get it (too) and he has been absolutely clear about that".

Early euphoria on financial markets over the deal for Spain dissipated on Monday as investors fretted over the details and exhibited fresh fears that Greece will make a disorderly exit from the eurozone.

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