March 7, 2013 / 5:52 PM / 5 years ago

Senior Merkel ally warns against Portugal, Ireland loan extension

BERLIN, March 7 (Reuters) - A senior lawmaker from Angela Merkel’s conservatives warned on Thursday against granting Ireland or Portugal any significant extension to their bailout loans, saying German lawmakers would not approve such a measure.

Ireland and Portugal, which have both stuck closely to the economically painful terms set out by their international lenders, have asked for the bailout loans to be extended.

Norbert Barthle, budget spokesman for Merkel’s Christian Democrats (CDU), said it was crucial to the euro zone’s policies that bailout agreements were honoured and upheld.

“A significant extension to the average loan maturity would be exactly the wrong signal, in particular as Ireland has just seen a significant reduction of its burden through debt restructuring. I cannot imagine that the Bundestag would approve this,” Barthle said in a statement.

Small adjustments such as backloading repayments within the current schedule could be useful to helping countries back to the financial markets, he added.

Lisbon and Dublin both intend to return to normal market financing this year and next, but face a refinancing peak in 2016 and then again in 2021 for Portugal and 2022 for Ireland.

Both have asked for the emergency loans to be extended in maturity by an average of 15 years to make it easier for them to convince financial markets they can manage their official repayments as well as service debt they raise from investors.

Germany’s Bundestag, the lower house of parliament, would have to vote on any substantial changes and it is not yet clear whether backloading of repayments within the current schedule would be seen as substantial. (Reporting by Alexandra Hudson, editing by Gareth Jones)

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