Irish Prime Minister Enda Kenny said the nation
can handle its debts, signaling the government has no plan to restructure its
Ireland’s debt will peak at 116 percent of
gross domestic product in 2014, according to government forecasts published on
April 29. The figure was 25 percent at the end of 2007.
“I think we can deal with it,” Kenny said
at the Council on Foreign Relations in New York today. “The scale of the challenge is enormous but so is the opportunity.”
Ireland last year sought an international
bailout, as investors shunned government and banking debt after the economy
shrank about 15 percent since 2007. Kenny is seeking a cut on the average 5.8
percent interest rate the Irish are paying on the aid.
The potential reduction is “probably of the
order of 75 or 85 basis points, which would be rounded up possibly to 100 basis
points,” Kenny said in an interview.
He said he wasn’t prepared to raise
Ireland’s 12.5 percent corporation-tax rate to appease fellow EU leaders, in
exchange for a cut in the rate.
Fine Gael leader Kenny took power in March,
after Fianna Fail, which has ruled since 1997, suffered a record defeat in
elections. Fine Gael had its best-ever performance and voters turned against
Fianna Fail after it presided over the worst recession on record and an 85 billion-euro
($124 billion) rescue from the EU and the IMF in November.
Some 35 billion of the euros were earmarked
for the banks. Kenny said the European Central Bank had insisted Ireland not seek to impose losses on senior bondholders in the two
“ pillar banks,” Bank of Ireland Plc and Allied Irish Banks.
He said if Anglo Irish Bank Corp, which was
nationalized in 2009, needed more capital, senior bondholders would be “treated
in a different light.”
The extra yield investors demand to hold
Irish 10-year bonds rather than German securities of similar maturity widened
16 basis points to 705 points today. A basis point is 0.01 percentage point.