Debt burden deal unlikely this year

 

Hopes for a deal to ease Ireland’s bank debt burden before the Budget have been dashed with Taoiseach Enda Kenny hinting it could be the new year before it takes effect.

Original plans to restructure the State’s bailout payments to the Troika by the end of this month were delayed, with Minister for Finance Michael Noonan admitting he was aiming for a resolution by December 5th.

But Mr Kenny said while he hoped for a timely conclusion, reaching the right agreement was his priority.

“I would like to think it could be concluded by the end of the year, but it’s important to get the right decision and that’s where our focus is,” he said. “What’s important is distinct from naming a particular date.”

He pointed out that while European Commissioner Olli Rehn originally earmarked October as the deadline, there were other considerations involved.

“Will we have a conclusion by the end of the year? You will recall Commissioner Rehn said he would like to see it finished by the end of October but I made the point I didn’t think that was practical,” he added. “There are other considerations for other countries with whom we are talking.”

Earlier, the president of the European Parliament insisted the EU should honour its commitment to Ireland to ease the debt burden.

Martin Schulz said Europe must live up to its commitments and show the same solidarity as the Irish Government showed in the financial collapse.

“You took the burden on your shoulders to avoid the crash of the system of all the other countries, also my country,” said Mr Schulz, during an address to the Dáil.

“Therefore I find the 27 per cent German participation in the package for Ireland is to give back solidarity to the country that gave solidarity to us.”

He added that he was optimistic leaders would stick a June agreement on separating bank and sovereign debt.

The 27 heads of state and governments also agreed at the summit to work towards restructuring Ireland’s repayments to its debt masters the Troika.

European Commission president Jose Manuel Barroso also gave his own assurances to Mr Kenny yesterday that the deal would be honoured.

Mr Schulz said: “Everybody has to live up to their commitments and be responsible for keeping their own house in order. That is one side of the coin, the other side of the coin is solidarity.” And he called for Europe to give a commitment to stick to the June European council summit.

There had been fears that the economically powerful states of Germany, the Netherlands and Finland would fight the agreement to separate Ireland’s bank debt and sovereign debt.

Last month, finance ministers from the three states said they believed the June 29th summit had only settled on the European Stability Mechanism (ESM) covering the cost of future bank debt issues.

They said it should not be liable for past problems which had already crippled some sovereign states.

Mr Kenny argued that any back-tracking on the deal would risk the credibility of the council. But he added that all states must stick to their promises to maintain the trust of the public.

“The biggest risk for Europe is the lack of mutual trust,” said Mr Schulz.

“How can we begin to regain the confidence of our citizens if the highest European body, the council of heads of states of government, is not reliable?”

Mr Schulz’s assurances followed talks between the Taoiseach and Mr Barroso in Brussels yesterday.

He was in Dublin as part of further preparations for Ireland’s presidency of the EU. He will also discuss the ongoing euro zone crisis and Ireland’s jobs and growth agenda.

PA

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