POLITICAL REACTION:FAILURE TO agree the €85 billion bailout with the EU and the IMF would have meant public servants and social welfare recipients having to endure a 38 per cent cut in income, according to Minister for Enterprise Batt O'Keeffe.
Mr O’Keeffe said the deal was a good one for the country and was the only option open to the Government.
While there would be reductions in social welfare payments in the forthcoming budget, the Government was seeking to minimise the impact of such measures. Moreover, such cuts would be nothing like the 38 per cent reduction that – but for the bailout – would have been needed, he said.
Mr O’Keeffe said the agreed interest rate of 5.8 per cent on the bailout loan was a good deal compared to what the bond markets would charge for similar borrowings, and what Greece had negotiated for a loan over a much shorter period.
“The interest on the Greek loans is 5.2 per cent over three years. Ireland’s interest rate will be 5.8 per cent for loans that, on average, are for 7½ years. A basic fact of sovereign borrowing is that the longer a country borrows money, the higher the interest you pay.
“The last bond auction conducted by the NTMA was on September 21st and they issued a 3½ year bond with an annual yield of 4.8 per cent and an eight-year bond with an annual yield of 6 per cent, so this is a very good deal with a rate of 5.8 per cent,” he said.
Mr O’Keeffe rejected a suggestion the Government had obediently agreed to everything that was being proposed by the EU and the IMF. He said the Government had delayed agreeing the deal and added that the Coalition had refused to apply for a bailout at an early stage as the ECB had wanted, but had instead used the time to engage in “pre-negotiations” which had resulted in the four-year plan, which was acceptable to the EU and IMF.
Separately, Independent TDs Finian McGrath and Maureen O’Sullivan met yesterday to discuss their attitude to the establishment of a technical group in the Dáil with Sinn Féin TDs.
Pearse Doherty’s success in the Donegal South West byelection increases the number of Sinn Féin TDs to five, meaning a group could now be formed with Mr McGrath and Ms O’Sullivan.
Ms O’Sullivan, who represents Dublin Central, said she had not been approached as yet by Sinn Féin. “I am not making any commitments, I’m just listening.”
Mr McGrath, who was elected in Dublin North Central, said there had been “no formal talks” with Sinn Féin as yet.
A technical group requires a minimum of seven TDs and Mr McGrath and Ms O’Sullivan are the only non-Sinn Féin TDs who have indicated a possible interest in being part of such a formation.
Rights extended to a technical group include participation in Leaders’ Questions and putting Priority Questions to ministers.