The new eurozone debt plan will save Ireland hundreds of millions of euros in interest payments on rescue loans, the Irish government said on Friday.

“Thursday was a very good day. We have prolonged the period of repayment (on loans) and we have significantly reduced the interest rate that is being charged upon us,” said the government’s Public Expenditure Minister Brendan Howlin.

Mr Howlin said the average borrowing period on loans had been about seven years and the new agreement would more than double the payback time to 15 years.

The eurozone summit, held essentially to arrange a second rescue for Greece and prevent the crisis in the eurozone from worsening, also eased loan conditions for Ireland and Portugal, both of which are also being rescued.

“So that is extremely positive. We are determined to get back into normal borrowing for the state.

“If we can prolong, as we have now agreed to, the paying back of the lump of money that we have borrowed, will be borrowing, under the programme it clearly makes it more possible for us to get back into normal bond borrowing earlier,” he said.

Howlin told RTE state radio the issue of interest rate reduction on loans was complex as there were a number of sources of funds involved with the EU-IMF bailout.

There are bi-lateral loans with Britain, Sweden and Denmark and Howlin said he expects that the summit deal on the interest rate reduction would apply to both European funds and the bi-lateral loans.

“It (the saving) is very significant money. We are cautiously saying of the order of €700 million. The actual crunching of the precise interest rate is complicated because of the variety of ways the money is drawn down.

“That is an annual figure, so it is a very significant cumulative gain to the state in terms of the pain that we would have to endure otherwise,” Mr Howlin said.

Ireland has been seeking an interest rate reduction in the face of demands to increase its controversial 12.5 per cent corporation tax which it has argued is vital in attracting international industrial projects that drive exports and economic growth.