Irish Finance Minister Michael Noonan said Greece should seek to reduce interest rates on its debts and push for later repayment dates rather than the “nuclear” options of leaving the euro area and writing off loans.
“There’s a middle road and it’s along the lines of what we did in Ireland,” Noonan said in an interview with Bloomberg Television’s Guy Johnson and Francine Lacqua in London Wednesday. “You negotiate to make your debt more sustainable, even without getting debt write-offs.”
Noonan and other euro-region finance ministers agreed on Tuesday to extend Greece’s bailout program for another four months after signing off on a reform plan proposed by the government in Athens. The SYRIZA party was elected to power last month on a platform that included writing off some debts and ending austerity.
Ireland, which sought a 67.5 billion-euro ($77 billion) international rescue in 2010 amid the worst property crash in western Europe, has emerged from an era of austerity, Noonan wrote in a column for the Irish Independent newspaper published Wednesday. The country has cut interest repayments by more than 10 billion euros through negotiations and reduced the amount it will have to borrow over the next decade by 20 billion euros by extending the maturities on some loans, he wrote.
“There’s a number of moving parts,” Noonan said in the interview. “It’s a question of agreeing on the parts that move to make the debt more sustainable and it’s in that space the negotiations can take place.”
Based on the provisional agreement between Greece and its official creditors on Feb. 20, the approval of the list was a condition for extending the availability of bailout funds for another four months. The current program, which has been keeping Europe’s most indebted state afloat since 2010, was scheduled to expire at the end of this month.
Approval of the Greek plans offered a short reprieve for the country, which risked defaulting on some of its liabilities as early as next month without further financing from the creditor institutions. Greece has until April to refine the details.
Negotiations on Tuesday weren’t “heated,” Noonan said. Ireland and other nations that took international assistance in the wake of the financial crisis, including Portugal and Spain, would prefer Greece to solve its problems using similar measures, Noonan said.
“Those of us who were in programs like Spain, Portugal and Ireland have insights that other members wouldn’t have,” Noonan said. “We’d be making suggestions, and fairly strongly, about the way to get out of difficulty along the lines that we used in our countries, rather than demanding a nuclear option of writing off debt or not continuing in the euro zone.”
A former leader of Fine Gael, Noonan was appointed finance minister in 2011 and helped lead Ireland out of an international bailout in 2013 by narrowing the deficit with tax increases and spending cuts.
The yield on Ireland’s benchmark 10-year security fell to 0.997 percent Wednesday, the lowest since Bloomberg started tracking the data in 1991. The yield peaked at 14.2 percent in July 2011. [Bloomberg]