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Republic of Ireland to get 'EU loan rate reduction' | Republic of Ireland to get 'EU loan rate reduction' |
(40 minutes later) | |
By Joe Lynam BBC News | By Joe Lynam BBC News |
Ireland is set to get an interest rate reduction on the emergency loans it has acquired from EU bodies, the BBC has learned. | Ireland is set to get an interest rate reduction on the emergency loans it has acquired from EU bodies, the BBC has learned. |
Currently, Ireland pays an average rate of 5.8% on loans agreed with the IMF, fellow Eurozone countries and a special fund set up by the European Commission. | Currently, Ireland pays an average rate of 5.8% on loans agreed with the IMF, fellow Eurozone countries and a special fund set up by the European Commission. |
It is unclear how much of a rate cut this will entail, but a 1% cut could be worth up to €400m ($572m; £349m) to the Irish exchequer | |
Sources tell the BBC that a special written procedure will be adopted next week ahead of the next meeting of EU finance ministers on 17 May. | Sources tell the BBC that a special written procedure will be adopted next week ahead of the next meeting of EU finance ministers on 17 May. |
This speeds up the implementation of a rate cut as it would bypass the need for a full vote by all 27 EU commissioners on the matter. | This speeds up the implementation of a rate cut as it would bypass the need for a full vote by all 27 EU commissioners on the matter. |
Concessions? | Concessions? |
Although Britain is not a member of the Eurozone, it would be involved in any agreement to change Ireland's bail-out loans. | Although Britain is not a member of the Eurozone, it would be involved in any agreement to change Ireland's bail-out loans. |
That is because the UK pays into the European Financial Stabilisation Mechanism as part of the EU Commission's budget affecting all 27 member states. | That is because the UK pays into the European Financial Stabilisation Mechanism as part of the EU Commission's budget affecting all 27 member states. |
Britain is also making a bilateral loan to the Irish government of £3.2billion (€3.8bn). | Britain is also making a bilateral loan to the Irish government of £3.2billion (€3.8bn). |
Last November, Ireland applied for a package of loans from the IMF and EU worth €85bn - €17.5bn of which comes from Ireland's own National Pension Reserve. | Last November, Ireland applied for a package of loans from the IMF and EU worth €85bn - €17.5bn of which comes from Ireland's own National Pension Reserve. |
It is unclear what type of concessions Ireland will have to make under the terms of any rate reduction. | It is unclear what type of concessions Ireland will have to make under the terms of any rate reduction. |
The Irish government has long said that it would never give up its low corporation tax rate of 12.5% as part of any deal, even though France and Germany have argued that some change to that rate would be required. | The Irish government has long said that it would never give up its low corporation tax rate of 12.5% as part of any deal, even though France and Germany have argued that some change to that rate would be required. |
EU watchers have suggested that Ireland may need to change its corporation tax base rather than the 12.5% rate. | EU watchers have suggested that Ireland may need to change its corporation tax base rather than the 12.5% rate. |
That could mean that large firms headquartered in Ireland might only be allowed to use revenue earned in Ireland rather than EU-wide for corporation tax purposes. | That could mean that large firms headquartered in Ireland might only be allowed to use revenue earned in Ireland rather than EU-wide for corporation tax purposes. |
The Irish government spokesperson said: "The reduction in the interest rate has still to be agreed by the member states and this will be discussed in due course". | The Irish government spokesperson said: "The reduction in the interest rate has still to be agreed by the member states and this will be discussed in due course". |
Some of the world's largest companies have their EU bases in Ireland including Facebook, Google, Intel and Microsoft. | Some of the world's largest companies have their EU bases in Ireland including Facebook, Google, Intel and Microsoft. |