NTMA head: €7.5bn 'haircut' savings available to Exchequer

The head of the National Treasury Management Agency (NTMA) has said around €7.5bn has been saved by imposing losses on junior bondholders in Irish banks, and that the funds can now be re-diverted towards helping to run the country until 2013.

Speaking before the Joint Oireachtas Committee on Finance, Public Expenditure and Reform this morning, NTMA head John Corrigan said that stress tests carried out by the Central Bank in March 2011 had quantified the additional capital support required by the banking sector at €24bn.

Mr Corrigan said that the NTMA had worked hard to minimise the amount of this additional capital to be provided by the taxpayer.

“Through initiatives like burden sharing with the junior bondholders and the sourcing of private capital for Bank of Ireland, the net amount of this capital provided by the State is now expected to be around €16.5bn,” he said.

“The savings generated can be redirected to funding the day-to-day operation of the country. This means that €68.5bn of the total €85bn funding under the (EU/IMF bailout) Programme is available to the Exchequer – an amount sufficient to meet our funding needs through to late 2013.”

In relation to the EU/IMF programme, Mr. Corrigan said that investors demand that the fiscal targets agreed with the troika are at the very least achieved: “Beating these targets would, of course, be the ideal result and would further distinguish Ireland from other troubled countries.”

Mr Corrigan also said that Ireland may begin a “phased re-engagement” with the international debt markets late next year.

He said that while the NTMA has maintained “a low level presence in the very short term debt markets throughout recent months,” he envisaged expanding that programme through the latter part of 2012 by “slowly extending the maturity of the debt we raise before beginning our efforts to raise long-term debt.”