‘No link’ between €1.5bn IMF deal and bank debt moves

Ministers have denied the Government has been "bought off" by Brussels with a €1.5bn debt deal so it will abandon a bid to get a recapitalisation on the €60bn bank bailout.

Plans approved by eurozone finance ministers to allow Ireland to repay IMF loans early could save the country €300m a year for the next five years, but Finance Department Minister of State Simon Harris insisted there was no linkage between the breakthrough and moves on the bank debt.

“No, it’s important to note that this is all multi-faceted and about looking at different ways we can limit the debt burden on the Irish taxpayer rather than being overly prescriptive.

“It’s not yet possible for this Government, or any other government to apply for retrospective recapitalisation.

“It is expected that those mechanisms will be in place around the end of November, and Government will then consider what’s the best thing to do.

“The Government will now have to decide how best to go about reducing debt. Is it better to sell some of our stake in AIB. Is it better to go down the retrospective recapitalisation route? So these are decisions that Minister Noonan and his colleagues will make in due course,” Mr Harris told RTÉ.

The Government trumpeted an agreement it thought had been done at the June 2012 EU summit on Irish retrospective bank recapitalisation as a “game changer”, but progress has been slow since then, with a number of leading European figures branding it a non-starter. The minister insisted the IMF deal would make a big difference to Irish finances. “It is a another significant step in reducing the debt burden on the Irish people.

“The IMF loans are being charged at 5% interest rates. We can borrow on the international markets at a much lower rate.

“Basically it means we can go about refinancing the IMF at a lower rate, and could save the taxpayer €1.5bn over the next five years.

“Now it’s at the technical and official level, we hope that this deal will be concluded and some of these loans could be refinanced in the calendar year,” the minister of state said.