The Irish Independent reports that Ireland and Portugal should get seven more years to repay loans from the EU to facilitate their return to full market financing, a recommendation from international lenders to EU policy-makers says.
Such a move, if accepted, would mark a significant concession to Ireland, helping to seal its return to normal borrowing on markets as well as offering a significant boost to Portugal as it struggles to push through spending cuts.
Ireland and Portugal received emergency loans from the EU in 2010 and 2011 respectively after investors refused to lend to them at sustainable prices.
The average maturity on Ireland's EU loans stands at about 12 years. By extending the maturity, the payments are spread over a longer time, reducing the burden on the countries.
But Ireland will need to roll-over around €20bn a year in 2016-2020 while Portugal will need the same amount per year between 2015 and 2021, a paper prepared for junior EU finance ministers and central bankers said.
The paper was drafted by representatives of the European Central Bank, the European Commission, the International Monetary Fund – the troika – and the European Financial Stability Facility (EFSF).
It will be presented to EU ministers who meet in Dublin on Friday and Saturday to discuss the extensions.
Finance Minister Michael Noonan said in Limerick last weekend that no decision will be taken this weekend at the finance ministers' meeting.
Because the meeting is described as informal, the ministers are likely to give only political support for the extensions for both countries, with a formal decision to follow only later next month.
But while Ireland is likely to get full support, the backing for more time for Portugal is likely to be made conditional on Lisbon finding new measures to fill a €1.3bn gap in the 2013 budget following a ruling by Portugal's constitutional court that some of the earlier planned steps were illegal.
"That is the maximum one can expect," said one senior Eurozone official involved in the preparations for the meeting.
While much of the debt that falls due between 2015 and 2022 for Portugal and Ireland is privately owned, it also includes IMF and EU loans.
Data on websites of the EFSF and the EU bailout fund, ESFM, shows that redemptions of EU loans account for €8.6bn in 2016 for Ireland, and almost €7bn in 2016 and €8.7bn in 2021 for Portugal.
Dublin and Lisbon have therefore asked EU ministers to extend the average maturity of the loans by 15 years since the EU redemptions would have to be financed by market borrowing.
The paper considered extensions of two-and-a-half, five, seven and 10 years and more, rejecting the shorter extensions as not beneficial enough for the two countries.
The Irish Independent also reports that plans to solve the mortgage crisis won't work, a new report warns.
It comes as the Government's attempts to deal with the mess received a separate blow with the announcement that financial regulator and Central Bank deputy governor Matthew Elderfield is to step down in six months' time.
The report from the Money Advice and Budgeting Service (MABS) finds the typical struggling homeowner in arrears is older than many experts previously thought, casting doubt on the official split mortgage plan to tackle the crisis.
It finds that the majority of people in mortgage distress are aged between 41 and 65.
Experts said this was a new and explosive revelation and contradicted perceived wisdom that most of those in arrears are in their 30s.
Regulators and the Department of Finance are hoping that most of the almost 100,000 distressed borrowers will be offered split mortgages.
This is where the mortgage is divided, with repayments made on the main part of the mortgage and the other part "parked" and dealt with later.
But the report on mortgage arrears, a copy of which has been seen by the Irish Independent, casts serious doubts on whether this will work.
The report, commissioned by the Department of Social Protection, examines almost 6,000 mortgage arrears cases dealt with by MABS offices.
Most of those who go to MABS because of mortgage difficulties are at an age when they should be nearing the end of their mortgage. However, they topped up their home loans during the boom, which has left them deep in debt.
According to the report, solutions "such as debt warehousing/split mortgages will not provide relief to many MABS clients in mortgage difficulty".
Instead, banks would be better off taking the mortgage and other debt together and writing down a portion of it to a level the borrower can afford to pay.
The report also finds it is taking banks two months to reply to distressed borrowers with offers to deal with their situation. It calls for the Central Bank to take action to deal with the delays.
Lenders are also criticised for offering arrangements to borrowers that they have no hope of meeting. This is because the repayments are set too high.
The banks are accused of offering solutions to those in arrears which focus on the mortgage debt only and ignore other borrowings.
Finance Minister Michael Noonan and Mr Elderfield last month told six banks to meet targets for the number of mortgages that are more than 90 days in arrears, forcing them to make offers that last more than a few months.
At least half of those with residential and buy-to-let mortgages at AIB/EBS, Bank of Ireland/ICS, Ulster Bank, Permanent TSB, KBC Bank and ACC will have an offer of a long-term restructuring.
The report finds that 16pc of its clients in mortgage trouble owe between €20,000 and €30,000 in secondary debts.
And 19pc owe more than €50,000 on credit cards, personal loans and credit union loans, according to the state-funded MABS which operates through 63 offices around the country.
'MABS Clients and Mortgage Arrears', by Collette Bennett, is due to be published in a few days.
The Irish Times reports that just over three years into a five-year contract, Matthew Elderfield (47)
surprised everyone in the financial sector yesterday by declaring his intention
to leave the Central Bank in October and return to the UK.
The Irish Times also reports that
Sir James Crosby must be given some credit for volunteering to forgo a
chunk of his lucrative HBOS pension and, in an unprecedented move yesterday,
surrendering his knighthood. His actions are in stark contrast to those of “Fred
the Shred”, the former RBS banker who was stripped of his knighthood in 2012 and
gave up part of his even more lucrative pension only after public and political
The Irish Examiner reports that one of the least optimistic economic forecasters has become slightly less pessimistic about the Irish economy’s prospects, upping its outlook for 2013 GDP growth by nearly half a percent.In the spring edition of its quarterly economic observer, the Nevin Economic Research Institute has predicted Irish GDP growth of 1% for 2013, to be followed by 1.2% in 2014 and 2% in 2015.
Previously, the independent economic think-tank had given a gloomier outlook of just 0.6% growth for this year and 0.8% in 2014, with the economy not likely to see growth of over 1% until 2015.
However, NERI has remained firm on its other headline previous prediction — of the Government failing to achieve its current budget deficit reduction target, to 3% of GDP, by 2015.
The institute’s current forecast is for the deficit to be 3.8% of GDP by then.
However, it is still too early — and quite unlikely — that Ireland will require a second bail-out, said Tom Healy, the director of the institute.
However, Dr Healy did add that, “without growth, the Government’s borrowing targets look ambitious and call into question the feasibility of the adjustment path currently being pursued”.
The institute’s latest bulletin also sees Ireland’s unemployment rate remaining at 14.7% this year, before marginally increasing to 15% over the next two years.
It added that the country’s gross debt levels should peak at 121.1% of GDP this year, before marginally reducing in 2014 and 2015.
Summing up the institute’s latest outlook, Dr Healy said: “The story behind these figures is one of continued stagnation, with sluggish growth and ongoing high levels of unemployment.”
Last week, the Central Bank marginally downgraded its GDP growth outlook for 2013, from 1.3% to 1.2%.
In March, professional services giant Ernst & Young slashed its growth forecast for the Irish economy in 2013 from 1% to 0.1%.
It concluded that it will be 2015 before GDP growth tops 2%.
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