Kenny: Pledge to separate bank and sovereign debt irreversible

Taoiseach Enda Kenny has said there will be no going back on a pledge by European leaders to separate banking and sovereign debt for bailed out countries.

He also dismissed claims that last week’s statement by three EU finance ministers about future debt deals was disturbing.

German, Finish and Dutch ministers signalled that the EU’s bailout fund would not address historic debt and, therefore, would not help separate sovereign and banking debt.

But ahead of a mass exodus of Irish Cabinet ministers to Brussels for meetings this week, Mr Kenny insisted the original June deal was still on track.

Speaking to his party on Saturday night at the Fine Gael presidential dinner in Dublin, he said: “At that meeting in June, there was a clear and unequivocal decision made — not by ministers, not by civil servants, not by commentators but by the heads of government of 27 [EU states].”

The agreement in June included the future option for breaking links between sovereign and bank debt, which would ease the recapitalisation of banks in countries such as Spain and Ireland. There was also a commitment made to review Ireland’s debt deal.

Mr Kenny said: “They’re the decisions that were made, they’re the decisions that stand, there’s no resiling or going back from a formal decision made by the leaders of the 27... countries of the European Union.”

But Sinn Féin’s Pearse Doherty argued yesterday that member states were moving to row back from the June statement and Mr Kenny had over rated it.

He said the statement from the Germans, Finish and Ductch carried much importance as they were the three strongest triple- A rated states in Europe.

Eleven of 15 Irish ministers will travel to Brussels on Wednesday for meetings, which will focus on Ireland’s presidency of the EU but will allow time for talks about the debt deal.

That meeting comes as state-owned AIB today pays senior unsecured bondholders €1bn.

This will bring to €18bn the amount Irish banks have paid out to bondholders so far this year.

Mr Kenny also outlined a series of meetings this week aimed to help accelerate savings in the public sector under the Croke Park agreement.

He said he had met three ministers last week, including Health Minister James Reilly, regarding cost saving measures.

Furthers proposals from ministers will be reviewed later this week, he added, and the Croke Park implementation body would be convened soon after.

Mr Kenny told his ministers, TDs and party officials at the dinner that the coalition Government was entering “a crucial phase”, but would remain intact.

Meanwhile, exchequer figures tomorrow for the third quarter in 2012 are expected to show that Ireland’s target to further reduce its deficit is on track with strong tax returns.