Draghi cautious on Irish debt plans

Wed, Apr 4, 2012, 01:00

European Central Bank chief Mario Draghi today maintained a cautious public stance on the Government’s effort to restructure some of its banking debt, saying the State must keep meeting its standing contracts and commitments.

While senior euro zone sources say technical work is ongoing on a deal to revise Anglo Irish Bank promissory note scheme, Mr Draghi declined two opportunities to say whether he supported Dublin’s campaign.

He was speaking at a press conference after the ECB left its main interest rate stead at a record low of 1 per cent.

Asked what he would say to people who were preparing to vote against Europe’s fiscal treaty in next month’s referendum, he said he was “fully confident” that the pact will be passed.

“Ireland and the Irish Government and the Irish people have undergone a very, very hard and harsh fiscal consolidation programme and I would say from all angles they deserve to be praised for their efforts,” he told reporters.

Asked about the promissory note question generally, Mr Draghi referred to an operation last week to redeem a €3.06 billion payment with a Government bond instead of cash.

“We take note of the scheduled end March redemption of the promissory notes and the subsequent reduction in emergency liquidity assistance provided by the Central Bank of Ireland,” he said.

“We expect that future redemptions will be met according to the schedule to which the Government has committed itself.

“As Ireland strives to regain market confidence – and frankly I have few doubts that it will succeed, very few doubts – it is of the utmost importance that the commitments of the Irish State are met in line with standing contracts and agreements.”

He offered no direct comment on talks between the Government and the EU-IMF troika to replace the promissory notes with EFSF or ESM bailout fund bonds, saying he was simply taking note of the deferral deal.

He described that initiative as a “completely Irish operation” and said the bank believes the Government “has very good chances” to return to private debt markets. “We expect that future redemptions will be met according to the schedule to which the government has committed itself,” he said.

“As Ireland strives to regain market confidence, it is of the utmost importance that the commitments of the Irish State are met in line with standing contracts and agreements.”