Minister for Finance Brian Lenihan has defended the 5.8 per cent interest rate attached to the €85 billion bailout package for Ireland.
Mr Lenihan said the rate was equivalent to the 4.5 per cent rate imposed on Greece for its bailout earlier this year.
In an interview with RTÉ, he said: “Greece only borrowed for an average of three years and faces a huge funding crisis at the end of the third year.
So we decided to borrow for seven and half years on average and that ensures that we don’t head into a financial cliff or funding crisis in the immediate future,” he said.
Asked whether the issue of mortgage defaults came up for discussion in the bailout talks, Mr Lenihan said the EU and the International Monetary Fund believed the threat of mass mortgage defaults in Ireland was exaggerated.
He said the problem of mortgage defaults was discussed “in detail” in the negotiations.
“The international authorities did not accept some of the literature that was written in Ireland in recent times about this. They believe it was exaggerated.”
On question of the senior bondholder debt, Mr Lenihan said: “Our European partners, the European Commission and the European Central Bank all made it quite clear to us that no programme money would be available if we went down that road because it would cost such spill-over effect throughout the euro zone.”
He said no country had defaulted on senior dent throughout this crisis and “there was no appetite for creating a precedent for this Ireland”.
Mr Lenihan said the Government intended to negotiate "big haircuts" on banks' junior bondholders.
