Minister Michael Noonan expects budget flexibility

Finance Minister Michael Noonan expects that the European Commission will hand him the type of financial flexibility that has been afforded to other countries in order for him to reshape the upcoming budget.

Earlier this week, Mr Noonan argued that concessions that afforded France an additional two years to reduce its deficit, having failed to do so already, risk recreating a two-tier Europe if similar flexibility is not afforded to smaller nations.

Mr Noonan insisted that he was not looking to break EU rules but was seeking greater spending scope, claiming that he did not want to be derided by the Irish electorate.

“In the next budget that I’m planning, the budget will be beginning with a ‘1’, but what I want is flexibility in the new expenditure rules to spend money that I have so that I can manage the economy properly and continue the growth create extra jobs and... provide extra money for public services and for the tax reductions to which we’re committed,” he told RTÉ Radio 1.

“I’m negotiating on the budget but I have quite significant political support… I’m not predicting what the end point will be yet but I expect to get the flexibility I require.”

Mr Noonan added that he has no objection to another review on the possibility of reducing the term of bankruptcy here to one year, the same as it is in the UK.

Separately, in his address to the inaugural Euromoney conference in Dublin yesterday, Mr Noonan said that the former Anglo Irish Bank, IBRC, is set to record a “significant surplus”.

He said that, at the time of the liquidation of IBRC, there was a risk that the proceeds from the sale of the assets would not be sufficient to cover its liabilities and that the taxpayer would have to make up the shortfall but this would not now be the case.

Further details on the extent of the surplus are to be published this morning.

The sale of AIB is now more likely to begin in early 2016 than towards the end of this year, said Mr Noonan.

He reiterated the Government’s intention to sell the bank in tranches, beginning with a 25% stake, but said it was now more likely be to 2016, as the original timeline of October or November this year was not unachievable.

AIB has received just under €21bn in State aid from the taxpayer since 2009. Mr Noonan, on behalf of the State, holds a 99.8% stake of common equity in the bank, along with a further €3.5bn in preference shares and €1.6bn of contingent convertible bonds known as CoCos.

Permanent TSB’s announcement earlier this week that it is to repay €400m in CoCos and the decision by AIB to make the first cash dividend payment of €280m in preference shares held by the State next May mark the beginning of a process to recover the State’s investment in the country’s three viable banks, according to Mr Noonan.