Merkel ally boosts Irish debt campaign

Ireland’s campaign to ease its debt burden received a boost last night when an ally of German chancellor Angela Merkel said it “could make sense” to extend the repayment period of the Anglo Irish Bank/Irish Nationwide promissory notes.

Norbert Barthle, budgetary spokesman for Germany’s ruling Christian Democrats (CDU), indicated Berlin would have no issue if such a deal was agreed between the Government and the European Central Bank (ECB).

“I would see no negative consequences if the repayments were extended to ease the burden on Ireland,” Mr Barthle told The Irish Times. “As far as the repayment period is concerned, an extension could make sense.”

Until now, Berlin has always avoided commenting on negotiations on the €30.6 billion promissory note, an IOU issued in 2010 to wind up Anglo Irish Bank and Irish Nationwide.

Germany’s federal finance ministry, citing the central bank’s independence, said yesterday it “doesn’t comment on issues involving the ECB”.

Yesterday’s remarks by Mr Barthle, usually a reliable barometer of Angela Merkel’s thinking, add momentum to negotiations to recast the promissory note before the next €3.1 billion instalment is due to be paid on March 31st.

Mr Barthle said that “these IOUs from Anglo . . . have to be treated separately” to ongoing European talks on using the ESM bailout fund to recapitalise struggling banks.

The Government hopes for progress on this second front to drive down financing costs ahead of a planned return to financial markets later this year.