Irish government sees opportunity from Greek crisis

Reuters

DUBLIN (Reuters) - Ireland's government is watching to see what concessions it can win on its EU-IMF bailout if Greece is given a new deal to resolve its worsening debt crisis, a senior government minister said on Sunday.

"The thing I am interested in is whether there are positive implications for Ireland about dealing with the situation the Greek government now confronts," Minister for Energy Pat Rabbitte told state broadcaster RTE.

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"The Irish government intends for the duration of the program to continue to negotiate improvements and to take advantage of developments elsewhere in the hope that there will be a multi-lateral approach to renegotiating (the) bailout."

Rabbitte, a former leader of junior coalition party Labour and once seen as a contender for the position of finance minister, also said that he would like to see a rescheduling of debt issued to Ireland under its 85 billion euros rescue package.

"Quite frankly the (interest) rate on Ireland must be reduced and in my own view the debt must also be rescheduled but that's another issue," he said.

There is a growing acknowledgement that Greece needs a new economic plan to tackle its deteriorating debt crisis and top euro zone finance ministers gathered in Luxembourg on Friday night to consider possible options.

A new plan may include pushing back Greece's budget targets, easing the terms of its 110 billion euros international bailout, giving it additional aid and a mild restructuring of its sovereign debt, official sources and analysts say.

Irish officials insist that the country's debt burden, expected by the IMF to peak at 125 percent of Gross Domestic Product (GDP) in 2013, is sustainable.

Central bank governor Patrick Honohan reiterated on Sunday that the sustainability of Ireland's debt depended on its economic growth prospects and he said the country's growing debt burden needed to be managed in discussions with European partners.

"If things don't go well in terms of economic growth it will be much more difficult .. in that case there will be a problem and in order to cope with that situation we need to think of better financial arrangements with Europe," Honohan told state broadcaster RTE.

"The fact of the heavy debt and the growth of that debt is a serious problem and needs to be managed in discussion and in negotiation with our European partners."

"We need to think of risk-sharing arrangements that would ensure that the growth will come right."

Honohan, who has previously called for the creation of GNP-linked bonds or similar risk-sharing innovations to help restore Ireland's debt dynamics, said Ireland had options in discussions with European partners.

He referred to the bailout as a "holding operation."

"This is a holding operation. We are keeping our options open. We have a number of cards, we don't have many cards in these negotiations, there is the right time to play your most important cards."

(Reporting by Carmel Crimmins; Editing by Hans Peters)