'No plans' to repay €3.1bn promissory note in March

 

Ireland does not plan to make a €3.1 billion repayment due next March on promissory notes used to recapitalise a failed lender, Minister for Communications Pat Rabbitte said, adding he was confident the European Central Bank would back a restructuring.

"We 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," Mr Rabbitte told RTE Radio.

Ireland is lobbying the European Central Bank (ECB) to restructure €31 billion in promissory notes - a form of high-interest IOU - used to recapitalise the former Anglo Irish Bank, now called the Irish Bank Resolution Corporation.

The Government struck a deal last March to avoid immediate payment of €3.1 billion due, settling the bill by issuing a 13-year bond. It has indicated it wants a deal on the entire debt before March 2013.

The ECB has indicated it would consider replacing the promissory notes with another instrument, but it has repeatedly said the Irish government must honour its commitments.

"The ECB is a difficult institution to bring around to stamping the deal that we need, but I believe that we will get that deal and I believe that we will get it before it falls due in March," Mr Rabbitte 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 said.

A spokesman for the minister did not immediately respond to an enquiry as to whether he believed the Government could not afford to pay the promissory note.

The Government has said its 2013 budget released last week did not include any expected savings from a deferral of the €3.1 billion payment, which would represent 6.2 per cent of the €50 billion of net current expenditure planned next year.

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