IRELAND’S FINANCIAL aid to Greece will be “cost-neutral” to the State, a Government spokesman said last night.

European governments agreed at the weekend to offer Greece a rescue package worth as much as €45 billion if necessary in an attempt to halt that country’s fiscal crisis.

The Department of Finance has begun to prepare legislation to allow Ireland to contribute its share of the aid package, should that be required.

Ireland’s share will be between €450 and €500 million. It will be offered “on a non-cost basis to us”, the Government spokesman said.

Minister for Finance Brian Lenihan briefed his colleagues on the issue during yesterday’s Cabinet meeting. In theory, Government sources say, the State could make a profit on the loan. The cost of a three-year fixed-rate loan to Greece would be around 5 per cent while the three-year yield on Irish Government bonds is around 2.35 per cent.

Meanwhile, German economist Joachim Starbatty, a professor at Tübingen University, has raised a legal threat against the Greek bailout. Prof Starbatty was quoted as saying the package breached EU rules because it offered Greece loans at below the market rate. “We will file a suit at the Constitutional Court against the credit from euro states,” Mr Starbatty told a German newspaper.

-Additional reporting, Reuters