Noonan seeks cuts to Anglo payment

Finance Minister Michael Noonan has intensified his campaign to cut the cost of repaying Anglo’s debts on the day the state handed over €1.2 billion to investors.

He needs the support of all the eurozone countries for a move that will, in effect, mean borrowing more than €30bn from the EU’s rescue fund.

But first he needs to get the troika — the EU, IMF and ECB — behind the plan that he hopes will see the interest rate cut and a longer repayment time.

Mr Noonan met European commissioner Olli Rehn and ECB president Mario Draghi to win their backing yesterday and plans to meet the IMF next.

Mr Rehn, who supported Ireland’s push to cut the interest rate on the bailout, acknowledged that the use of the promissory notes in bank recapitalisation was a challenge.

The Government would like to have a new repayment scheme in place before the end of March next year, when the first of the promissory notes for €3.1bn repayment becomes due.

Under the current arrangement, the state will pay €3.1bn every year for ten years with an additional €7.6bn by 2031. The debt accounts for 20% of GDP.

“We have always known that the promissory note arrangement in Anglo Irish Bank made by the previous government was a very expensive arrangement for the taxpayer,” said Mr Noonan.

“We are exploring the possibility of re-engineering it so it will be a less costly solution, but it’s too soon to say whether we will be successful or not and we are not putting any deadline on it.”

The policy paper should be completed by experts from the troika in the next few weeks, when it will then form the centrepiece of discussions at a political level to convince Germany and others to support it.

The finance ministers finalised the new bailout fund, the ESM, which should come into effect in July. It should bolster Ireland’s case for additional money to recapitalise the IOUs.

Finance ministers made only a few changes to the draft fiscal treaty and so the likelihood that Ireland will be forced to put the debt brake into the Constitution was further reduced.

A new draft will be presented to EU leaders at their summit next Monday and, once agreed, they are expected to sign it in March.