German Chancellor Angela Merkel has stressed that Ireland will be treated as special case when it comes to measures to ease its 64 billion euro bank bailout debt burden.
Mrs Merkel and Taoiseach Enda Kenny issued a joint communique on Sunday evening after a weekend of uncertainty over Ireland's bid to cut a better deal on its austere repayment programme.
Confusion emerged after Mrs Merkel indicated at an EU summit on Friday that debts racked up in the past would not be covered by a new emergency fund to recapitalise eurozone banks.
Her claim that the envisaged European Stability Mechanism (ESM) would be limited to future debts appeared to scupper a key objective of the Irish Government's plan to cut its debt load. In so doing it looked to have cast doubt on an agreement struck by European leaders in June to improve the Irish programme.
The communique from both leaders, which followed talks between them, did not state whether the ESM could be used to ease Ireland's debt legacy woes but it did reaffirm the June 29th agreement that the sustainability of the Irish programme would be improved.
"The Taoiseach Enda Kenny and Chancellor Angela Merkel spoke together this afternoon," read the joint statement. "They discussed the unique circumstances behind Ireland's banking and sovereign debt crisis, and Ireland's plans for a full return to the markets.
"In this regard they reaffirmed the commitment from June 29th to task the Eurogroup to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well performing adjustment programme.
"They recognise in this context, that Ireland is a special case, and that the Eurogroup will take that into account."
Mrs Merkel's remarks at Friday's news conference came in response to a question related to indebted Spanish banks. It is understood the Irish authorities have since received assurances the Chancellor's comments were specifically about Spain and did not relate to the Irish bailout programme.
Over the weekend an Irish Government spokesman insisted the Dublin administration had never been prescriptive on the timetable for a deal or on the specifics of how legacy debt should be dealt with.