FRANCE HAS dropped its demand that Ireland alter its corporate tax rate and has backed improved bailout terms agreed on Thursday.
President Nicolas Sarkozy said he supported better bailout terms for Ireland because it would have been “deeply unfair” to punish countries that had made “major efforts” and respected their rescue deal commitments.
A senior official confirmed Paris had now settled for pledges from Ireland to “engage constructively” in talks on fiscal policy and a common consolidated tax base.
Mr Sarkozy added Thursday’s deal moved the EU closer to having its own European monetary fund. He said France and Germany would present “extremely ambitious” proposals on economic convergence in August.
Minister for Finance Michael Noonan, meanwhile, welcomed the British government’s cut in the interest rate on its portion of the Irish bailout, and said he expected Denmark and Sweden to follow. That would take debt savings up to about €900 million and with a reduction in interest payable to the International Monetary Fund to follow it would bring the annual savings next year to more than €1 billion.
However, he warned the cut in the interest rate on the various elements of the bailout fund would not make December’s budget any easier, but accepted the easing of the terms was a very significant step for Ireland, which made the outlook for budgets in the coming years less harsh.
“There’s a commitment that if countries continue to fulfil the conditions of their programme, the European authorities will continue to supply them with money even when the programme concludes,” he said.
"That takes the whole issue of a second bailout for Ireland off the table as long as we fulfil the conditions. If we are not in a position to go back to the markets due to events outside our control the European authorities will continue to give us money," he told The Irish Times.