Deal 'must reduce taxpayer burden' - Opposition

The success or otherwise of the Government’s deal with the European Central Bank over the €31 billion promissory notes would depend on a significant reduction of the burden of the debt on the taxpayer, the main Opposition parties have said.

In preliminary reactions to the development - made before the full details were made public - Fianna Fáil finance spokesman Michael McGrath and his Sinn Féin counterpart Pearse Doherty said separately that a noticeable reduction was necessary for the deal to be deemed a success.

Mr McGrath said that he would have expected that the overall stock of debt would have to be reduced in line with the agreement made at a summit of EU leaders last June that agreed to break the link between sovereign and bank debt.

He said that if the notes were converted to long-term government bonds over a period of 27 year, the interest rate would have to be low or close to zero for it to have an appreciable effect on the Government’s fiscal position.

“Will this deal influence taxation and spending decisions? Will people feel it in their pocket,” said Mr McGrath, speaking on RTÉ.

Mr Doherty said the litmus test of this deal will be the ultimate impact it has on debt and the annual budget. He reiterated his party’s position that the promissory notes should not be repaid.

“My party has always insisted that the Anglo promissory notes are not the debt of the Irish taxpayer and we have urged this Government to not pay them, because we cannot pay them.

“The details of this deal are sketchy. Sinn Féinhas no objection to the liquidation of Anglo Irish bank if it rids us of the current promissory notes. However, that is where the government should stop. It should not be replacing the promissory notes with a sovereign bond.

“Rather than seek a write-down of the promissory notes, this government appears to have focussed all its efforts on changing the terms under which the notes are repaid. If what has been emerging in the news transpires, and the promissory notes become a sovereign bond, this severely limits future restructuring of these notes.”