State in talks on cuts to Anglo bailout bill

EU and IMF lenders are working on an alternative to reduce the costs for Ireland of the €47 billion bailout bill for Anglo Irish Bank.

Though still at an early stage, Finance Minister Michael Noonan said that work on an alternative to the promissory note for the bust bank, now known as the IBRC, was under way.

The EU/IMF/ECB troika will produce a paper on the possible changes to the debt burden in the coming weeks, said Mr Noonan.

He said technical work had been ongoing in Brussels, Washington and Frankfurt about changes to the promised payments for Anglo.

The promissory note — essentially an IOU of payments the Government is injecting into the bank — is being paid at an interest rate of 8%. The interest on the €30 billion payments to Anglo currently amounts to €16.8bn over about 20 years, as detailed in our table, below right.

Economic commentators have suggested in recent weeks that a reduction in this rate would help Ireland’s troubled finances and send out a good message about our economic recovery.

However, Mr Noonan said any new “mechanism” or agreement for the Anglo payments would have to be signed off by EU states.

“The development is that there is now agreement that they pool their resources and they work to develop an agreed common policy position,” he said.

“But, of course, it’s still at the side of officials rather than on the political side. Any change that would have to be made on any of these things would need the write off of, at the end of the day, the representatives of 27 countries because it’s an Ecofin decision.

“What they’re working on is an alternative to the promissory note which would reduce the costs to Ireland and make it clear to everybody that Ireland’s position to sustain and repay its debt had improved.”

It also emerged yesterday that promised changes to personal insolvency laws will be delayed until April.

Mr Noonan denied there was a rift among ministers over the terms of reducing the bankruptcy term down from 12 years.

He said technical difficulties with the proposed bill had delayed its release.

Mr Noonan said legislation to help debtors emerge from bankruptcy would also apply to those with mortgage debt.

“It will include measures to allow everybody who has a debt to either follow a judicial route or a non-judicial route to ease the burden of their debt.”

Justice Minister Alan Shatter, whose officials are overseeing the new debt laws, said this week that the new bankruptcy term would at least be halved to five years or less and the conditions enforced by the year’s end.