Lenihan says his decisions add up

AS A regular reader of Accounting and Business, the in-house magazine of ACCA Ireland, I was drawn to a five-page interview in its May issue with Minister for Finance Brian Lenihan.

It produced a feisty performance from the Minister, who defended some of the decisions he has made over the past two years.

On Anglo Irish Bank and calls for him to wind it up and leave bondholders swinging, the Minister said: “As you know, in Iceland, there’s a big public debate about default and the fact that so many of their debts are external to them. What’s forgotten is that, in the case of Iceland, the banking system foisted external deposits on the citizenry of Iceland.

“In Ireland, half of the funding for the Irish banking system comes from within the country. So, a default is a default on ourselves. Everyone accepts that depositors have to be paid.

“Then there is a case of the bondholder, who is often portrayed as some anonymous banker with a brolly in the City of London. The reality is that credit unions in Ireland commonly take bonds in banks, senior debt bonds.

“In the Dáil recently, I was urged to start negotiating with bondholders and I replied by saying: ‘Do you want to go and tell your local credit union that half their savings should be torched because they happened to be in Anglo Irish Bank?’ ”

On this year’s budget, Lenihan was clear about what needs to be done. “We had to find €4 billion [in cuts] last year and €3 billion is the figure this year,” he said. “However, €1 billion has already been pencilled in through reductions in capital expenses. Much of that has been achieved because we’ve seen a reduction in tender prices . . . but we do have to find €2 billion and it’s important that we do that in the budget.”

Lenihan was also asked about a previous comment of feeling “lonely” in the job. “When the first rejection of the Lisbon Treaty took place, I felt lonely because I realised that I had a long way to go to bringing the public on the journey to accept the position Ireland was in.

“I took the view on budgetary matters that we had to keep going back and making the necessary corrections to the budgetary position until we stabilised the problem.

“It was an accountant who advised me. Politicians are inclined to do what they want to do when it is politic but, in this case, we simply had to keep taking action until we stabilised the situation – and we have.”