Eurozone finance ministers have agreed to extend maturities for Ireland and Portugal, pending agreement from other EU Finance ministers this afternoon.
Eurogroup chairman Jeroen Dijsselbloom said the meeting has agreed to a seven-year extension of loans from the EFSF to Ireland and Portugal.
It hopes to make the decision definitive later today, if the full Ecofin meeting agrees to a similar extension to loans from the EFSF, the second bailout fund.
There had been some concern that the rejection by the Portuguese supreme court of pay cuts for civil servants would delay the decision, but assurances by the Portuguese that they will find other cuts in the next few weeks seem to have been accepted.
Speaking at a press conference in Dublin Castle, Mr Dijsselbloom said that the ministers had discussed the ninth review of Ireland's bailout programme and he congratulated the country for its continued steadfast progress in implementing the programme.
He said that Ireland is a living example that adjustment programmes do work.
EU Commissioner Olli Rehn said the extension of Irish bailout maturities is another important step on the road to exiting the programme.
Mr Rehn said he hopes and trusts the Ecofin meeting will be supportive of the measures.
He said it was crucial that both countries continue along the lines of fiscal consolidation so that that the Irish and Portuguese people can put the harsh crisis they are experiencing behind them.
Mr Dijsselbloem said he expects the deal will be signed-off by national parliaments in EU member countries within a week.
However, he said there was "no conclusion" on legacy debt at the discussions.
Earlier, a senior official in the European Commission warned that Ireland needs an extension of its bailout repayment deadline to offset the negative fallout from the Cyprus bailout affair.
The official has said that the Cyprus bailout and the inconclusive Italian election results had both pushed up borrowing costs "significantly" for Ireland.
In a letter to EU and eurozone finance ministers on the eve of today's informal meeting in Dublin, the official also warned that the "bail-in" of uninsured depositors in the Cyprus bailout "could have negative consequences on the confidence of depositors in Portugal and Ireland".
In the letter, seen by RTÉ News, one of the most senior officials in the European Commission's economic division, Thomas Wieser, points out to EU finance ministers that Ireland and Portugal are "still highly vulnerable" to developments in other eurozone countries, namely Cyprus and Italy.
For that reason it was "paramount" that finance ministers give a "strong signal" of support to Ireland and Portugal by agreeing to an extension of the deadline by which both countries are required to repay bailout loans.
Such a move could help "ring-fence" the two countries from turmoil associated with the Cyprus bailout.
Any delay in a "concrete decision" could disappoint the markets and offset the efforts of Ireland and Portugal to regain market confidence, Mr Wieser concludes.
Mr Weiser also points out that Ireland's debt repayments in the coming years "are large compared to the past and the market situation can potentially be challenging if market conditions in the future [became] more adverse again".
The correspondence confirms that the Troika and the European Financial Stability Facility have recommended a maturity extension of seven years.
It also confirms that the Government had initially sought an average maturity extension of 15 years.
However, the choice of seven years would limit the liabilities of those member states who have guaranteed the bailout loans to Ireland and Portugal, Mr Wieser writes.
He argues that the seven-year extension would support Ireland and Portugal's return to full market financing and would be positively viewed by ratings agencies.
It would also increase the probability that no further EU financing would be needed after the two countries emerge from their respective bailouts.
Ireland and Portugal would therefore be able to issue bonds that would not "compete" with the redemption of bonds issued by the EFSF and the moneys loaned from the EU.
On the issue of how Cyprus can raise its contribution to its bailout, Mr Dijsselbloem said that Cyprus will not be forced to sell its gold.
He said the option had been put forward by Cyprus themselves, but that it would not be a demand from the Troika.
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