A step forward in accelerating our economic recovery

In addition, by agreement with the ECB, the liquidation of the IBRC has caused the Central Bank to take ownership of the €3.4 billion bond used to settle the promissory note last March.

As a result, there will be a €20 billion reduction in the NTMA’s market borrowing requirements in the next decade as we seek to restore the economy to full employment, and a very large reduction in the debt servicing costs of the State over the next generation.

The average interest rate on the new bonds will begin at just over 3 per cent, compared with an interest rate of well over 8 per cent on the promissory notes.

This will result in a reduction in the State’s general government deficit of approximately €1 billion per annum over the coming years, which will bring us €1 billion closer to attaining our 3 per cent deficit target by 2015. This means that the expenditure reductions and tax increases will be of the order of €1 billion less to meet the 3 per cent deficit target. This plan will lead to a substantial improvement in the State’s debt position over time.

Today’s outcome is an historic step on the road to economic recovery. It secures the future financial position of the State by reducing the burden on Irish taxpayers arising from the bailout of Anglo Irish Bank and Irish Nationwide.

Step-by-step, this Government is undoing the disastrous banking policies that brought this State to the brink of national bankruptcy.

The agreement has reduced Ireland’s vulnerability from the huge debts taken on by Irish taxpayers as a result of the cost of rescuing failed private banks.

Positive expectations

Irish citizens can look forward once again with positive expectations. The legacy banking debt hoisted on the Irish taxpayer is a heavy burden. The promissory notes in Anglo Irish Bank and Irish Nationwide served as a millstone around the neck of the Irish taxpayer. This burden served to erode confidence and limit the economy’s ability to grow.

The new plan will likely materially improve perceptions of our debt sustainability in the eyes of potential investors in Ireland, leading to lower interest rates and faster growth than would otherwise be the case.

A successful Irish exit from the bailout by the end of this year would prove that a combination of intensive national reform efforts and European solidarity can deliver results.

Let there be no doubt, this is no silver bullet to end all our economic problems. After the catastrophic economic management of the past decade, there is still a long way to travel in our country’s journey back to prosperity and full employment. The damage done by these financial institutions will take many years to rectify.