Bank debt deal 'could still be derailed'

Minister for Finance Michael Noonan has warned that a possible deal on Ireland’s banking debt could still be derailed.

In the Dáil he reiterated his remarks that “while a deal is likely a deal is not certain and a deal has not been concluded”, on the €28.1 billion debt for the former Anglo Irish Bank.

He warned “there are significant outstanding matters not yet concluded and of sufficient magnitude to still derail the deal”.

Opposition TDs had questioned the Minister about the contents of the deal and the benefits for the public, on the basis that an agreement was “likely”, which would result in Ireland not having to make the €3.1 billion payment, due in March to the European Central Bank.

Fianna Fáil public expenditure and reform spokesman Seán Fleming asked would a deal mean an “easing up on the austerity programme and the expenditure cuts”.

Confirmed

He said he was very pleased the Minister had confirmed to the House the deal was likely.

“I honestly believe you would not have made such a statement unless you were 100 per cent sure we would get the deal.” He questioned the possible contents and asked if the Minister was considering minimal interest rates, close to 0 per cent, and if he had sought a reduction in the actual principal.

But the Minister said the Laois-Offaly TD was “incorrect in assuming that a deal is certain. What I said was that it was likely.” He had been asked in Brussels in December if Ireland would be paying the promissory note. “I replied that because a deal was likely it was unlikely that we would be paying it in full. There is no advance on that.”

Sinn Féin finance spokesman Pearse Doherty said it was clear the way the deal was being orchestrated was about “passing the burden from this generation to the next generation”.

But Mr Noonan said there were a number of TDs in the House and a number of commentators who regardless of the deal, would position themselves to oppose and rubbish it regardless of its contents.

He said relief from the burden of the promissory note would be welcomed by all taxpayers, but because the deal had not been concluded, “I cannot describe the elements of a deal that is not yet finished”.

Reduction

Mr Doherty accepted the Minister could not go into the detail but he asked if the Government’s intention was not to have to pay some of the capital, a cut in the debt-to-GDP ratio.

Mr Noonan told Mr Doherty it was “idle to speculate about something that is not yet in place and which may not be in place”. He was “not stalling”.

“I am just saying that while the negotiations have proceeded in a satisfactory manner they have not concluded and there are still significant outstanding items which are of significant magnitude” that could still prevent the conclusion of a deal.

Later he told United Left Alliance TD Richard Boyd Barrett Ireland was moving in the right direction and the sale of €500 million of three-month treasury bills by the NTMA for 0.2 per cent interest, the “lowest rate at which any Irish government ever raised funds on the market”.

He acknowledged “some kind of deal on bank debt is probably being factored in. If we do not get a deal on the bank debt, the interest rates will move in the opposite direction.” He added the Fitch agency had said this week that if Ireland got a significant deal on its debt, “it would upgrade our rating to a straight A. So, we are moving in the right direction”.