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

The EU is working to lower interest rates on bail out loans to Greece and Ireland and is looking at a second rescue for Athens in a chaotic effort to avert a disorderly debt restructuring.

The renewed rise in tension on Greece has strengthened Ireland's 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 said at a special session of Ireland's parliament to celebrate 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% next year and averaging 3% growth between 2013 and 2015.

However, the forecasts of the country's IMF creditors are a touch more pessimistic, while Ireland's export-led growth depends on favourable factors outside its control.

Ireland's government is hoping to gain concessions on the EU's portion of an à85-billion rescue package, some à40-billion, 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 onepercentage point cut in March.

"We remain fully confident that we will be able to reduce the current rate," Kenny said.

The European Commission said yesterday it hoped to see a decision within weeks on reducing the rate charged to Ireland, which is 6.05% for the eurozone's emergency fund and 5.7% 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 harmonising the corporate tax base in Europe in exchange, or raise its own low corporate tax rate.

Kenny reiterated yesterday that Dublin would not cut its 12.5% corporate tax rate.