There is growing uncertainty over the timing of a restructuring deal on Irish bank debt that is currently the subject of negotiations between the Irish Government and the troika.
Speaking to reporters yesterday, the Tánaiste Eamon Gilmore cast doubt on whether an agreement would be reached by October. “We are progressing discussions with European institutions and with European member states on those issues. Under the agreement that was reached in June, it was intended that those discussions would continue up until the end of the year. We would hope that progress would be made on those discussions by the October summit meeting, but the discussions are continuing, and they will continue over the next number of weeks.”
When asked whether he expected a deal by October, Mr Gilmore said, “Well, you can’t — I mean, the formula that was agreed in June was one whereby the new arrangements would come into effect once a supervisory arrangement had been put in place, and that supervisory arrangement wasn’t intended to be in place until the end of the year. But it is possible of course that progress can be made faster than that, but we’ll progress it week by week.”
Meanwhile the new chief economist at the Irish Central Bank, Lars Frissel, said if the Irish Government could secure a deal on the bank debt then it could be one of the factors that could tip Ireland into a “virtuous circle.” “I am optimistic about Ireland. Hopefully a deal at a European level will come soon.”
Speaking at the Certified Public Accountant’s Annual Business Lecture, Mr Frissel said a value-based property tax would be an effective means of correcting the budget deficit, although whether it was introduced was ultimately a political decision. “Most of the countries I know have some sort of value-based property tax. It makes a lot of sense and it is a steady form of income.” Mr Frissel said it was an equitable form of taxation. “However, it would be more reasonable if it had been done 10 years ago.”
The Central Bank economist said the new Personal Insolvency Bill had a big role to play in solving the debt crisis. Moreover, debt forgiveness had a role to play in tackling the mortgage arrears problem, he added
In a wide ranging speech focusing on the “causes, culprits and cures” for the crisis, Mr Frissel said that euro member states were carrying too much debt and there was no alternative to austerity.
There had to be a complete change of corporate culture at the banks and an improvement in risk management practices to protect shareholders and creditors. Authorities also had to change the way they regulated the financial sector.
© Irish Examiner Ltd. All rights reserved