A top Irish banker has urged the government to renegotiate the terms of the EU/IMF bail-out – and spread payments over 30 years.

Former Bank of Ireland chief executive Mike Soden, now a member of the board of the Central Bank, believes the EU should give Ireland three decades to repay its loans.

He has also stated, in an interview with the Sunday Independent, that the loan should be interest only for the first 10 years.

Soden, speaking from his own personal point of view, claimed the Irish economy will not recover until the European Community puts in place a system of long-term funding.

“The steps that are being taken at the moment by the Government and the EU are deferring a problem, not addressing the solution,” said Soden.

“The solution is the acquiring of long-term funding for a minimum of 30 years with perhaps the first 10 years having only interest repayments, and this will allow the economy to recover and allow liquidity to be put into the system.

“There is no market at the moment that can provide us with 30-year money.”

Widely respected within the worldwide banking industry, Soden also believes there is much the European Union can do to ease Ireland’s current problems.

His comments came at the end of a week when the government admitted that half of all tax currently raised is being used to pay the interest on Ireland’s borrowings.

“The European Community is capable of creating 30-year money for sovereigns that are in need and I believe that they should make that,” he added.

“That is the only solution that I see working in the future. This is not a three-year time horizon. This is a 30-year solution.”

The latest exchequer returns show that the Government is currently using more than 50 per cent of all income tax to meet interest payments on the national debt.

“You’ve got to ask who in the markets are going to provide the money when the rating of the country is one step away from junk,” said Soden.