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Taoiseach insists Ireland will not seek to restructure debt

French finance minister Christine Lagarde speaks during a press conference to announce her candidacy to head the IMF in Paris. Photograph: Bertrand Langlois/AFP

Taoiseach Enda Kenny has said the State will not seek to restructure its debt, but will continue to seek improvements in the EU-IMF bailout package.
“We will repay our loans. We will not restructure our debt,” Mr Kenny told reporters in Celbridge, Co Kildare.

“We are not looking for any further time. We are going to meet this challenge, as we are already meeting it under the conditions as set out in the EU-IMF deal. But that is not to say that we will not continue to look for improvements to the package.”
German Chancellor Angela Merkel said this evening that troubled euro countries must be given time to boost their competitiveness and return to a primary surplus in order to repay their debt.

Speaking at a party conference of her Christian Democrats (CDU) in Berlin, Ms Merkel also indirectly rejected the idea of a debt restructuring for Greece, saying she did not believe conditions of existing bonds should be changed.

She added, however, that it was of “existential importance” to Germany that the eurozone’s new rescue mechanism, which is due to take effect in mid-2013, include provisions to allow private sector participation in any future debt relief.

Ireland received an €85 billion EU-IMF bailout in November, making it the second euro zone country nation to get aid after Greece. The Government is in negotiations to secure a lower interest rate on the EU portion of the loan.
The Government’s bid for lower interest payments has so far been blocked by Germany and France, which want it to drop its veto on harmonising the corporate tax base in Europe in exchange or raise its corporate tax rate from the current level of 12.5 per cent.

The Taoiseach’s comments came after French finance minister Christine Lagarde confirmed she will stand as candidate to be the new managing director of the IMF to succeed Dominique Strauss-Kahn, who resigned after he was charged with sexually assaulting a hotel maid in New York.

“I have decided to present my candidacy for the head of the IMF,” Ms Lagarde told a news conference, adding that she had been encouraged by the support she had received from a number of countries.

Ms Lagarde has a “strong appreciation” of the reasons for Ireland’s stance on its corporate tax rate, Minister for Finance Michael Noonan said after a meeting between the two ministers in Paris today.

Speaking after a 45-minute meeting with his French counterpart, devoted mainly to the impasse over corporate tax, Mr Noonan said he explained the Government would not be making any concession.

“It’s absolutely crucial to our programme of inward investment and consequently it’s crucial to our industrial policy and our jobs policy,” he said.

“She has a very strong appreciation of that. I asked her to reflect on what I was saying. I know she will do that. But I wasn’t negotiating, I wasn’t asking her to give me concessions across the table. I just wanted to put everything in context.”

France’s official stance is that any reduction in the interest rate on Ireland’s bailout loans is conditional on an increase in the corporate tax rate.

On Ms Lagarde’s candidacy for the post of IMF managing director, Mr Noonan spoke highly of her and added that it would be in Ireland’s interest to see her take on the role.

“In the four months or so that I’ve known Christine Lagarde, I think she is an excellent candidate who has all the capabilities of being a very good head of the IMF,” he said.

“We also have a self-interested reason, of course… It’s important to Ireland’s interest to have somebody heading up the IMF who understands in detail the difficulties we face and the steps that have already been put in place to ensure that we can work our way out of it.”

Mr Noonan said the Government had not formally endorsed Ms Lagarde’s candidacy. “But certainly we see her as a very capable candidate who not only fulfils the qualities that we would require in the job but also would be in a position to assist us in fulfilling the requirements of our programme.”

Mr Noonan was in Paris to attend celebrations to mark the 50th anniversary of the OECD. Minister for Foreign Affairs Eamon Gilmore, who is also in the French capital, said there was a “better understanding” of Ireland’s position on corporate tax after meeting his counterpart Alain Juppé earlier this week.