April 10, 2013, 1:51am
IRELAND and Portugal could get major extensions to their bailout loans this week, if other EU countries accept recommendations from international lenders.
A possible seven-year extension would ease the pressures on their finances, making it easier for the recovering nations to return to accessing market funding.
The help would be particularly timely for Portugal as it is struggling to push through austerity measures against courts which have struck down some key spending cuts.
Ireland and Portugal got emergency loans from the EU in 2010 and 2011 respectively after investors refused to lend to them at sustainable prices.
The average maturity of EU loans to Ireland is 12.5 years and to Portugal between 12.5 and 14.7 years depending on which pot the funds came from. Ireland is set to return to full market financing late this year and Portugal in 2014.
By extending the maturity, the payments are spread over a longer time, reducing the burden on the countries.
The recommendations were drafted by representatives of the European Central Bank, the European Commission, and the International Monetary Fund – the three are known as the Troika – and the European Financial Stability Facility.
It will be presented to EU ministers who meet in Dublin on Friday and Saturday to discuss the extensions.
Because the meeting is described as informal, the ministers are likely to give merely political support for the extensions for both countries with a formal decision to follow only next month.
But while Ireland is likely to get full support, the backing for more time for Portugal is likely to be made conditional on Lisbon finding new measures to fill a €1.3bn (£1.1bn) gap in the 2013 budget following a ruling by Portugal’s constitutional court that some of the earlier planned steps were illegal.