Writedown for Greece queried as Ireland shoulders full debt

 

OPPOSITION PARTIES have questioned why Greece will benefit from a 50 per cent writedown of its debt while Ireland will still have to shoulder the full cost of the State’s debts.

In their separate responses to the deal brokered at the summit of euro zone counties in Brussels early yesterday morning, Fianna Fáil and Sinn Féin both focused on the Government’s refusal to seek reductions in the State’s debt burden.

Fianna Fáil finance spokesman Michael McGrath welcomed the breakthrough but said Ireland has received few concessions compared to other programme countries.

“From an Irish perspective, it is noteworthy that the Government did not seek any reduction whatsoever in the Irish debt burden and has committed itself to paying its debts in full,” he said.

“At the same time Greece will benefit from a 50 per cent writedown of its debt. The Government is clearly of the view that Ireland’s total debt burden is entirely sustainable and manageable. This is markedly different from the rhetoric we heard from Fine Gael and Labour before last February’s election.”

Mr McGrath said it was deeply disappointing the Government was still not in a position to recoup some of the massive costs incurred by taxpayers in rescuing Irish banks.

“The Taoiseach should have sought an explicit assurance in the communique that new powers being given to the European Financial Stability Facility to recapitalise European banks could be used to reduce the ongoing cost being incurred by Ireland in recapitalising Irish banks.

“There is now a compelling case for this issue to be revisited given that Ireland had to recapitalise its banks at a time when no European fund was available to support it.”

He said it was certain the Government had conceded it will repay in full the €3.5 billion of unsecured and unguaranteed bonds in Anglo Irish Bank and Irish Nationwide.

Sinn Féin president Gerry Adams said the Government has missed a “clear opportunity” to put Irish banking debt on the agenda and to negotiate a reduction of billions of euro.

“The Government has signed off on a 50 per cent cut on debt for Greece and is now on a plane home to get a cheque for €700 million ready to hand over to unguaranteed Anglo Irish bondholders.

“There is no political, legal or moral obligation on the Government to pay this,” he said. “Sinn Féin is not opposed to the write-down in Greek debt. But what is good enough for Greek citizens should be good enough for Irish citizens.”

However, Fine Gael’s Paschal Donohoe rejected the contention, saying Ireland was in a completely different situation to Greece.

“For a start, Greece’s debt levels are completely unsustainable. Even after this reduction of 50 per cent, Greece’s debt to GDP ratio is still higher than Ireland’s.

“What’s more, the Greek economy is shrinking and it remains still in the throes of a critically deep recession. Ireland’s GDP, on the other hand, has grown in the first two quarters of this year,” said Mr Donohoe.