Kenny admits ‘significant challenges’ to renegotiate promissory note deal

The Taoiseach has admitted there are “very significant challenges” in negotiations with the ECB on reducing the burden of the €30bn promissory note used to bail out Anglo Irish Bank.

Enda Kenny sounded a far more cautious note on the deal yesterday than in recent weeks, but said he was “confident that we will have a conclusion and a deal on this before the next payment date which is due at the end of the March”.

Ministers discussed the issue “briefly” at yesterday’s Cabinet meeting, despite a rejection from the ECB of the Government’s preferred option to restructure the notes by wrapping them into 30- to 40-year bonds.

An ECB source told the Irish Examiner on Monday such a deal was never possible because it contravenes the ECB’s strict rules on monetary financing, or lending, to member states.

Fianna Fáil leader Micheál Martin said the Government “didn’t indicate all along, and certainly not last week, that there was any setback at all, or any significant challenges in the context of the ECB meeting”.

He said it was only through newspaper reports that there was any indication of difficulties in the talks.

But Mr Kenny responded: “There are clearly very significant challenges,” adding those challenges were “very significant, they are very technical and they are very complex”.

Just two weeks ago, he said: “I don’t contemplate not getting a deal here.”

One possibility is that the Government might “back load” the payments but still repay the full amounts due by the existing 2023 deadline, meaning much smaller payments would be made over the coming years, while sums far greater than the annual €3.1bn would be paid in the next decade.