Honohan upbeat over Anglo deal

The Government’s negotiations with the EU to secure funding to support the country’s €30bn bailout of Anglo Irish Bank are not difficult and the country should get a lot, according to Central Bank governor Patrick Honohan.

Mr Honohan said that time was on Ireland’s side and that the final outcome would come after the European Commission dealt with the problems of Spain.

On the This Week programme on RTÉ Radio One, Mr Honohan was asked if the negotiations were proving more difficult than expected. He replied : “Not at all, not at all.”

Mr Honohan said the Irish Central Bank is fully supportive of Government’s campaign to reduce the €30bn cost of bailing out the former Anglo Irish Bank, now the Irish Bank Resolution Corporation (IBRC).

“In my view it’s not a question of whether something will be done, it’s a question of what will be done. That’s how I would present it.

“This is a decision of the summit, to have a look again at the Irish financial sector and see what can be done to improve the effectiveness. Something will be done, we would like on the Irish side a lot to be done and very effectively.

“There is a range of possible outcomes. I am hopeful that we will reach the top end of those possibilities.

“We always knew these negotiations would be difficult because the Irish Government will push for a lot and I am sure we will get a lot,” he said.

Mr Honohan stressed that politics is the solution to the problems of Europe and the individual countries of Europe.

“We are democratic societies, politicians are the people who capture and influence the democratic opinion.

“I think a lot of the discussions and decision-making around the new ECB programme was to ensure that the politicians both in the lending and the borrowing countries were fully aware of the issues and the possible solutions.

The remarks come as the eurozone enters a dangerous week, strewn with potential land mines, in a somewhat more optimistic mood after investors welcomed an ECB plan to prevent a breakup of the single currency.

German judges, Dutch voters, IMF inspectors and Brussels regulators could all spring surprises that make it harder to resolve a sovereign debt crisis which is almost three years old and weighing on the world economy.

On Wednesday, Germany’s constitutional court rules on the legality of the eurozone’s permanent financial rescue fund, the European Commission unveils detailed plans for a eurozone banking union, and the Netherlands holds a cliff-hanger general election.

And the IMF is interested in a role in the design and monitoring of the ECB’s plan to staunch the eurozone debt crisis with unlimited bond purchases, IMF managing director Christine Lagarde said yesterday.

Under the bond-buying plan, devised by ECB chief Mario Draghi, the central bank would stand ready to buy any amounts of sovereign debt with maturities of up to three years in return for a bailout deal with tight strings attached.

— Additional reporting Reuters