Kenny steps up pressure for deal on Anglo debt

Sat, Dec 15, 2012, 00:00

RAISING FUNDS:Taoiseach Enda Kenny has stepped up pressure for a deal to recast the debts of Anglo Irish Bank, suggesting the negotiation could have an “important” bearing on Dublin’s ability to break free of the bailout next year.

Introducing a new dimension to his argument for debt relief, Mr Kenny said the Government needed to raise funds in the first half of 2013 to complete a smooth exit from the EU-IMF programme later in the year. “We have to be in a position to raise sufficient monies in the first half of 2013 to exit our programme successfully and that’s why the conclusion of the promissory note is so important to us,” he said.

Deal anticipated

While saying he anticipates a deal with the European Central Bank under which the Government will not have to make a €3.1 billion repayment in March, he stopped short of repeating Pat Rabbitte’s claim that the money simply will not be paid. “We want to re-engineer and restructure those in a way that we won’t have to pay 3.1 billion in March. We’ve made that very clear, and we’re following through on those technical discussions.”

Asked whether Dublin would make the payment if it failed to secure a deal with the ECB, Mr Kenny said he “never assumes failure” in politics.

“I’m always optimistic. I believe in politics. I believe in negotiations. There are very technical matters here that we do not debate in public but are following through very diligently,” he said.

He was speaking after EU leaders pledged to agree by the end of June 2013 the parameters for any direct bank rescues by the European Stability Mechanism fund. This would include settling on a definition of “legacy” – or historic – assets.

Germany’s reluctance to grant powers to the ESM to retrospectively bear the cost of legacy losses is a big hurdle for the Government to pass. It wants the fund to directly invest in AIB and Bank of Ireland.

The question of Ireland’s legacy debt would “form part of these discussions”, Mr Kenny said. “The important thing here is that the June 29th summit made the commitment to break the link between sovereign and bank debt. It also made specific reference to Ireland. In that sense what interests me is the commitment being followed through,” he added.

“The definition of what constitutes a legacy debt will now be discussed by the finance ministers. It doesn’t have to wait until the conclusion of the discussions.”