Paying/not paying the promissory note


Sir, – Minister for Communications Pat Rabbitte said: “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” (Report on RTÉ’s The Week in Politics, Home News, December 10th).

It is entirely untrue that the promissory note was not paid this year. The promissory note was paid in full. The Government borrowed €3.06 billion from Nama. Following this, Nama passed this debt to Bank of Ireland, so now, instead of owing €3.06 billion as a promissory note, which might easily be written off, the State owes the same amount to Bank of Ireland, where it is much less likely to be written off.

Here is the Department of Finance confirmation of this fact: “The April SPU Exchequer deficit estimate of €18.7 billion included, as part of non-voted capital expenditure, a €3.06 billion payment in respect of the IBRC promissory note. However this €3.06 billion payment was settled with a Government bond and the transaction is not included in Note 6 of the end-October Exchequer Statement (non-voted capital expenditure) due to the statutory payments basis of the Finance Accounts (with which the Exchequer Statement aligns) and the exceptional nature of the transaction in that regard. Therefore it is not accounted for as part of the Exchequer deficit in 2012 as the 2011 payment in respect of the IBRC Promissory Note was last year.” (Medium-Term Fiscal Statement – November 2012 – Incorporating the Department of Finance’s Autumn, Forecasts, Page 10, footnote #1)

Here it is again on page 32 as a footnote to Table 4.1: “The 2012 IBRC promissory note payment was settled with a Government bond and as such is not reflected as part of the Exchequer deficit (or EBR) in the end-October 2012 Exchequer Returns. For simplicity however it is counted as part of the 2012 EBR in table 4.1.”

And finally on Table 2 of Page 89, it is listed as a payment under point (b): “Non-cash payment in 2012 of IBRC promissory note” .

The Government did not raise €3.06 billion this year against the promissory note through taxes, cuts or market borrowings, but this does not change the undeniable fact that the promissory note was paid with a Nama loan.

If the promissory note had not been paid as scheduled, the Irish Central Bank would have been obliged to withdraw the IBRC’s access to Exceptional Liquidity Assistance (ELA) as the promissory notes would no longer have been acceptable as collateral – and it is this ELA funding which constitutes the billions in loans that is keeping the IBRC alive. Without access to this ELA, the IBRC will cease to exist. That this didn’t happen is proof that the promissory note was paid this year.

The media plays a vital role in society by bringing Government and other powerful interest groups to account. It is startling that this Government has been allowed to consistently make this claim without contradiction when it is so patently untrue and misleading. The Department of Finance’s document confirms this. The continued operation of IBRC confirms this.

At the very least, can the people of Ireland expect our own media to publicly clarify this point with the Government with all possible speed? – Yours, etc,

KEN ROGAN, Irishtown, Dublin; MARIE MORAN, School of Social justice, UCD NESSA Ní CHASAIDE, Debt and Development Coalition Ireland; ANDY STOREY, School of Politics and International Relations, UCD; NIAMH MCCREA, Institute of Technology, Carlow On Behalf of Debt justice Action,

North King Street,

Dublin 7.