DUBLIN (Reuters) - Ireland's bailout package should be made more flexible to help the eurozone struggler recover faster from its crisis and ensure its return to debt markets, Europe's top economics official said in an opinion piece in an Irish newspaper.
In an article to be published in the Sunday Business Post, Olli Rehn called for the interest rates on Ireland's loans and the maturity of the debt to be lengthened.
"Ireland provides hard evidence that the EU-IMF conditional financial support approach is working," Rehn, the EU's economic and monetary affairs commissioner, wrote.
"The efforts should be encouraged by lengthening the maturities of the loans and lowering the interest rates."
Eurozone finance ministers agreed earlier this week to lengthen the maturity of debt and lower the interest rate on loans from the European Financial Stability Facility (EFSF), the eurozone's rescue fund, in an attempt to bring the bloc's debt crisis under control.
Ireland is borrowing 17.7 billion euros from the EFSF and 22.5 billion euros from the European Financial Stabilisation Mechanism (EFSM), the EU's rescue fund, as part of its 85 billion euros bailout from the EU and the IMF.
Ireland is contributing 17.5 billion euros of its own funds towards the bailout, and by 2013, interest repayments will swallow 20 percent of tax revenues. The average maturity of the bailout loans is 7-1/2 years.
Dublin has been asking for lower interest rates on its European loans for months but has faced opposition from France, which wants Ireland to raise its 12.5 percent rate of corporation tax in return.
Dublin has refused to bow to that demand.
Earlier this week, Finance Minister Michael Noonan admitted even with an agreement by eurozone finance ministers to lower the average 5.8 percent rate of interest on its European debt, Paris may still demand Ireland raise its corporation tax rate.
Such a scenario would stymie any deal.
Earlier this week, Moody's downgraded Ireland's credit rating to junk status on concerns it would need a second bailout when the current rescue package runs out in 2013 and private investors would likely have to take a haircut in a second rescue package.
Noonan has said the government is planning to make a tentative return to debt markets in the second half of 2012.
(Reporting by Carmel Crimmins; Editing by Sophie Hares)
