Noonan cautions against expectations
IRISH REACTION:MINISTER FOR Finance Michael Noonan said there had been “a major policy change” at European level. However, he cautioned against expectations that this year’s budget would be affected by the decision to separate bank debt from sovereign debt.
He noted, however, that the euro group statement had expressed the intention of examining the Irish financial sector’s situation. “They also made the distinction between countries that are fulfilling their programmes and preforming well, and countries that aren’t,” he said.
“And it is quite clear that they are prepared to assist now particular countries who are fulfilling their programmes, and policy will no longer be on a one-size-fits-all basis.” He added: “It will probably not make any difference to the upcoming budget, because we have to work through the details of a solution . . . It won’t impact on this year’s budget.”
Speaking later on RTÉ radio’s News at One programme, he said it was “important now more than ever” that the State continue to fulfil its bailout programme “because that positions us to get the additional help that is signalled in this policy statement”.
The most significant thing that had happened in Brussels, Mr Noonan said, was that Europe had switched its policy position on linking banking and sovereign debt. This, he said, was something that appeared highly unlikely as recently as a fortnight ago, and it could make Ireland’s future position more sustainable.
He said the Government had for some time sought to extend the repayment period and improve interest rates on some of the State’s debt, particularly on the Anglo Irish Bank promissory notes, but that European leaders had now “gone beyond that”.
“What we want to do is negotiate a scheme where we can effectively transfer from the sovereign debt the recapitalisations already done, so that our position is more sustainable and we get back into the markets.”
Fianna Fáil leader Micheál Martin welcomed the principle included in the deal regarding the decoupling of banking and sovereign debt, which he said should have been done a long time ago rather than at the 11th hour.
He said greater clarity was required in relation to a number of elements of the agreement such as would it apply to the Anglo Irish Bank promissory notes, if bondholders would be contributing and how State holdings in recapitalised banks would be valued.
Sinn Féin finance spokesman Pearse Doherty said there was no doubt the euro group statement was a change in policy, but:“The Government have completely oversold this and over-egged it.”
Socialist MEP Paul Murphy said: “Anyone reading the agreed statement will see that it is as clear as mud when it comes to Ireland’s bank debt. The agreement reached does not address the fundamentals of the crisis in Europe.”