Ireland and Portugal moved closer to winning extra time to pay back emergency loans, trying to become the first countries to rebound from Europe’s debt crisis.
“I think we will come to an agreement today,” Dutch Finance Minister Jeroen Dijsselbloem told reporters before chairing a meeting of euro-area counterparts in Dublin today. “It helps these countries to come out of their aid programs. More time makes it easier for them to fund themselves from capital market.”
A policy paper prepared for the meeting calls a seven-year extension the most likely option. Ireland’s 10-year bond yields of 3.89 percent make it a stronger candidate for a full return to market financing than Portugal, which has yields of 6.34 percent and faces demands for additional budget cuts from creditor governments.
Ireland aims to exit its bailout at the end of the year, while Portugal’s program ends in May 2014. European governments are keen on selling them as crisis-management success stories as they struggle to keep aid plans for Greece and Cyprus on track and gear for a possible bailout of Slovenia as well.
“There doesn’t seem to be significant pushback and we’re hoping that it will go through,” Irish Finance Minister Michael Noonan said. “I don’t foresee any objection in principle.”
While both countries have returned to bond markets since tapping official aid, Portugal’s market access “can only be considered as limited and opportunistic,” according to the options paper, which was prepared by the “troika” of creditors and the European Financial Stability Facility.
A new snag cropped up last week when Portugal’s highest court blocked 1.3 billion euros ($1.7 billion) in savings, forcing the government to find new reductions. Finance Minister Vitor Gaspar will today outline plans to plug the gap.
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