Right time to 'restructure' Anglo debt

 

Central Bank Governor Patrick Honohan said while the State will make good on the Anglo Irish bailout, it needs more time than it currently has to repay.

Mr Honohan said it is possible, if complex, to restructure the notes in a legally watertight way that is not open to criticism of being a form of monetary financing of a state.

Ireland is lobbying the European Central Bank to restructure €31 billion in promissory notes - a form of high-interest IOU - used to recapitalise the former Anglo Irish Bank.

The next €3.1 billion instalement on the promissory notes is due next March.

In an interview reported in the Frankfurter Allgemeine Zeitung, however, Mr Honohan said the time was right for a deal to restructure the notes.

Minister for Communications Pat Rabbitte said over the weekend the Government would not pay the instalment.

“[The Government] didn’t pay the promissory note this year and as far as I’m concerned we’re not going to pay it next year. It’s as simple as that,” he said.

“We can’t pay. This was an IOU entered into by the previous government when the Anglo Irish Bank collapsed and the notion of us paying it next March doesn’t arise.”

Mr Rabbitte was speaking on RTÉ’s The Week in Politics on Sunday night, where he said a comprehensive deal on bank debt next year would have the effect of reducing the target for Ireland’s current deficit in 2014 from about 7.5 per cent to 6.4 per cent.