LONDON — Ireland sealed a deal with the European Central Bank on Thursday to ease the crippling cost of its public bailout of failing banks, keeping the country on track to wean itself from international emergency loans.
By overhauling repayment of the debts it incurred to rescue its banks, Ireland will be on track by the end of 2013 to be able to borrow money on the open market the way most other governments do. It was effectively shut out of those markets at the end of 2010, when the gaping hole ripped into its budget by the bank bailout forced Dublin to go cap in hand to its European partners and the International Monetary Fund.
“Today’s outcome is an historic step on the road to economic recovery,” Prime Minister Enda Kenny told lawmakers Thursday. “It secures the future financial position of the state.”
Under the new deal struck with the European Central Bank, the Irish government now has the next 40 years, instead of less than half that, to pay off the cost of rescuing the banks that went spectacularly bust in the country’s overheated property market. The interest rate on those debts is also to be dramatically cut. All told, the agreement will save Ireland about $27 billion over the next decade alone.