Finance Minister Michael Noonan indicated that Ireland is still quite a long way off getting a deal to cut the cost of the €31bn promissory notes for the defunct Anglo Irish Bank.
While he would not rule in or out the possibility of postponing the €3.1bn due at the end of the month, he said there was no agreement yet on what option would be the best one to pursue in cutting the cost of the IOUs.
While the Government had its preference for the way that the complex promissory notes deal would be restructured, the EU/IMF policy paper was not yet complete.
When it is, the Government would then look for political support from the other EU countries.
“In the final analysis, it will be a political decision which will decide whether there is a new arrangement to replace the promissory note,” he said in Brussels where he was attending a eurozone ministers meeting.
Asked if it was possible that something could be worked out to allow the repayment at the end of the month to be put off, he said: “I don’t think everything will be sorted, but I think we are making progress, so we will stick with it”.
He said that all issues, including getting the ECB to fund the promissory notes long-term instead of the EU’s rescue fund, the EFSF, was on the table still. “All issues are still being discussed — the technical paper, by its title and nature, is looking at a number of options.”
He would not speculate on whether ECB involvement would amount to monetary financing. He believed there was general agreement that alternatives could be put in place.
The ECB has to be happy with the options for dealing with the promissory notes, since they were involved at a number of different levels including holding the IOUs as collateral against the emergency liquidity for Anglo, but so far there was no such solution in sight.
Until the ECB is satisfied, there is little hope of getting political agreement on a deal that the Government hopes would dilute the payment over a long period of time, reducing the annual sum to be repaid and the total that will be added to the country’s debt each year.
Under the current arrangement — which Mr Noonan said there was general agreement that, as drafted, it was a “pretty bad arrangement and a very expensive arrangement for Ireland” — there will be annual repayments of €3.1bn up to 2023 falling to just under €1bn after that until 2031. At 8.3% interest, it would see the State having to stump up over €47bn in total.
Fianna Fáil finance spokesman Michael McGrath said that the conflicting messages from different government ministers could jeopardise a deal on the Anglo bank debt.
“What seems to be happening is that each party in the coalition is most anxious to get the good news out — long before any deal is done at all,” he said.
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