Noonan: No rush on promissory notes deal

The Government is in no rush to get a deal on restructuring the €31bn promissory notes, preferring to leave it until later in the year, Finance Minister Michael Noonan said.

Discussions on drastically reducing the €3.1bn the State has committed itself to repaying every year are “going well”, according to a number of sources.

However, the issue of postponing the second repayment on Mar 31 is still wide open, the minister said. “In European affairs things go right up till the end,” he told RTÉ.

He is in Paris for talks with his counterpart, Francois Baroin, to update him on the work of the troika to replace the Anglo promissory notes with a longer-term loan from the EU, and to promote Irish trade.

The Government favours borrowing the money from the new permanent rescue fund, the ESM (European Stability Mechanism), as the debt would not appear on the State’s books. However, this fund does not come into place until July.

One of the alternatives is to borrow the money from the EFSF (European Financial Stability Facility), from which the EU bailout comes. However, under the terms of this fund, the debt would appear on the books, adding to the 120% of GDP forecast for next year.

The Government fears that higher debt figures would make getting back to the markets even more difficult for the country once the bailout funds come to an end in 2013.

Mr Noonan confirmed the IMF supported Ireland’s case for a loan to replace the IOUs with a low interest, long-term loan and the European Commission was not opposed. The ECB “has its own view”, he said, but he welcomed that they were all working on a joint paper to find a solution.

The ECB was “not enamoured” by the promissory notes structure put together by the previous government.

They were particularly unhappy having to take the IOUs as collateral from the Irish Central Bank to provide €40bn in emergency liquidity for Anglo Irish.

“You could take it that the ECB were never particularly happy with the collateral provided by the promissory notes and would like stronger collateral,” he told RTÉ.

He said that the ECB will be crucial in the restructuring bid, adding that the changes they are requesting “will have to align with our interests”, and ensure that the markets understand Ireland can pay its debts.

Mr Noonan said there was no push to get a deal before the fiscal treaty referendum as he believed it would not be wise to try to “buy” voters.