Irish and Greek leaders could want new deal

Tim Wallace
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GREECE and Ireland could demand changes to their own bailout deals, it emerged yesterday, after Spain was given much more lenient terms on the terms of its bank rescue.

The two smaller countries, as well as Spain’s neighbour Portugal, faced tough constraints on government spending and taxation before they were able to access bailout cash.

But Spain has escaped such tough conditions, both because it is already undergoing a major fiscal consolidation, and because the International Monetary Fund is not taking part in this bailout.

Ireland already renegotiated the interest paid on its bailout loans last year, from six per cent to between 3.5 and four per cent.

After that, its government called in March for some payments to be deferred to spread out the cost of paying back the loans, to help the government access debt markets again and avoid the need for a second bailout.

Spain’s deal could encourage Irish leaders to push further for the strings to be removed from its own debt.

In Greece, which faces another general election this month, politicians in the leftist Syriza party have called for the bailout to be radically renegotiated – and their cause could be boosted by the contrast between the stringent conditions placed on Greece and the ease with which Spain received its cash.

The three leading parties already failed to form a governing coalition after the last election in May, as Syriza opposed the bailout in its current form while New Democracy and Pasok both favour it.