Ireland warned on Monday it would need more favorable terms to rid itself of its debt troubles and said it was confident of securing a cut in the interest it pays for its EU aid without conceding ground on tax rates.

The European Union is working to lower interest rates on bailout loans to Greece and Ireland and is looking at a second rescue for Athens in a chaotic effort to prevent a disorderly debt restructuring.

The Irish government believes the renewed rise in tensions around Greece has strengthened its hand in talks with its EU partners.

We carry a heavy burden of debt. Without strong growth, questions of sustainability will remain, Prime Minister Enda Kenny told a special meeting of Ireland's parliament in celebration of Europe Day.

There is no doubt that a reduction in the interest rate on the moneys we are borrowing from Europe would be a meaningful and appreciated measure.

Ireland expects to end three years of economic contraction this year before racing to gross domestic product growth of 2.5 percent next year and averaging 3 percent growth between 2013 and 2015.

However the forecasts of the country's IMF creditors and economists polled by Reuters are more pessimistic, while Ireland's export-led growth is dependent on favorable factors outside of its control.

Ireland's government is hoping to gain concessions on the EU's portion of an 85 billion euros rescue package, some 40 billion euros, on the back of any fresh deal offered to Greece.

Kenny said he was confident that Europe would give Ireland a cut in the interest rate it is charging for its loans. Athens got a 1 percentage point reduction in March and there may now be more to come.

He said a deal may be struck at the next meeting of EU finance meetings on May 16-17.

I can't say for sure but obviously we have been pursuing this diligently, it may well be that a conclusion maybe reached there, he told reporters at a briefing.


The European Commission said it hoped to see a decision within weeks on reducing the rate charged to Ireland, which is 6.05 percent for the euro zone's emergency fund and 5.7 percent for the European Union's rescue mechanism.

Ireland's bid for lower interest payments has so far been blocked by Germany and France, which want Dublin to drop its veto on harmonizing the corporate tax base in Europe in exchange or raise its own ultra-low corporate tax rate.

Kenny reiterated that Dublin would not raise its corporation tax rate.

For Ireland our 12.5 percent rate of corporation tax is, and will remain, a cornerstone of this country's economic policy, he said. It cannot be changed without our consent and to put things as plainly as possible, that consent will not be forthcoming.

(Reporting by Carmel Crimmins and Padraic Halpin; editing by Mike Peacock)