Bailed-out EU countries should be refunded some of the interest they have paid on loans once they pay off their debts, according to the chair of the EU’s economic and monetary affairs committee.
Sharon Bowles, a Liberal Democrat MEP, says she is concerned at the high levels of interest bailed-out countries are paying and says rich EU members stand to gain at the expense of poorer nations.
She says: “I propose the profit, or premium, which sponsoring countries currently make out of the high interest rate, and which is higher than the cost to them of providing the loan, should be returned to the borrowing country once they have repaid their debt in full.
“The overall health of the EU economy will be much more viable and sustainable if struggling countries get these premiums back, rather than letting better-off countries pocket them.” (article continues below)
She says until a country’s debts are paid off in full, premiums should be kept in a pool to act as insurance against defaults.
It was reported last month that the coalition government hopes to make a £400m profit from its £3.25 billion bilateral loan to Ireland, for which the interest rate was set at 5.9%.
Bowles says Ireland is facing an average charge of around 5.8% on the €85 billion rescue package offered in November by EU member states. She says member states should not be acting like investment banks.
She says: “Fellow EU countries should be acting out of solidarity with their neighbours, not like investment banks. It is fair that a country sponsoring a rescue package should not be out of pocket and should be guarded against risk, but that does not mean they have to pocket windfalls.”