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 Paschal Donohoe
Paschal Donohoe © AFP via Getty Images

Ireland will nominate Paschal Donohoe to a second term as head of the eurozone’s influential group of finance ministers, the Eurogroup, despite the fact that he will relinquish the finance portfolio and become public expenditure minister next month.

“The Irish minister for finance will represent Ireland and will attend Eurogroup and Ecofin,” the government said in a terse statement that gave no insight into the behind-the-scenes political horse-trading within the ruling coalition that led to the decision.

“If he is re-elected, Minister Donohoe will carry out his duties as president of the Eurogroup as minister for public expenditure and reform,” the statement said.

Ireland will on December 15 hold an unprecedented series of government job swaps, agreed as part of a deal struck between the country’s two main large traditional parties, Fianna Fáil and Fine Gael — and the Green Party in 2020. Under the deal, the Taoiseach, or prime minister, will rotate on December 15 along with a series of other key posts.

Donohoe, of Fine Gael, will swap with Michael McGrath, current public expenditure minister, who is from Fianna Fáil.

Fine Gael leader Leo Varadkar, the incoming Taoiseach, sparked a row in September by saying that holding the Eurogroup presidency was of great benefit to Ireland and that Donohoe did not have to be finance minister to keep the role.

McGrath retaliated that such a move would “represent a significant diminution in the role of the minister for finance”. There was no immediate reaction from McGrath.

However, the unusual set-up is not without precedent. Jean-Claude Juncker, who was Eurogroup president between 2005 and 2013, latterly served on the body alongside his country’s finance minister Luc Frieden.

The process for election will be announced at the Eurogroup meeting on November 7 with voting in December via a secret ballot of the 19 euro area finance ministers. The winner needs a simple majority of capitals.

Donohoe took over the Eurogroup post, which runs for two-and-a-half years, in 2020 in the midst of the Covid-19-induced economic slump. He is seeking a second term as the eurozone’s economy once again faces the threat of a recession, this time driven by the energy crisis.