Govt must use euro summit deal to secure reduction in cost of recapitalising Irish banks – McGrath

Irish Government commits to repaying debt in full as Greece gets 50% write down

The Irish government must use the agreement reached at the euro summit early this morning to reduce the cost incurred by the State in recapitalising Irish banks, according to Fianna Fáil Finance Spokesperson Michael McGrath.

Deputy McGrath stated, “At a European level, it is to be welcomed that the euro summit has agreed on a template which aims to resolve the ongoing eurozone debt crisis. It remains to be seen, however, whether the agreement will have any enduring success.

“From an Irish perspective, it is noteworthy that the government did not seek any reduction whatsoever in the Irish debt burden and has committed itself to paying its debts in full, while at the same time Greece will benefit from a 50% write down of its debt. The government is clearly of the view that Ireland’s total debt burden is entirely sustainable and manageable. This is markedly different from the rhetoric we heard from Fine Gael and Labour before last February’s election.

“It is deeply disappointing that the government did not achieve any recognition in the agreement of the extraordinary cost incurred by Irish taxpayers in rescuing Irish banks. The Taoiseach should have sought an explicit assurance in the communiqué that new powers being given to the EFSF to recapitalise European banks could be used to reduce the ongoing cost being incurred by Ireland in recapitalising Irish banks. There is now a compelling case for this issue to be revisited given that Ireland had to recapitalise its banks at a time when no European fund was available to support it.

“In addition, it now seems certain the Government will proceed with the repayment in full of €3.5 billion of unsecured, unguaranteed bondholders at Anglo Irish Bank and Irish Nationwide Building Society, starting with a €700m payment next Wednesday. The government has failed utterly to achieve any progress on this front despite its clear promises on the issue.

“It is also clear from the communiqué that Taoiseach Enda Kenny and his European colleagues are preparing the ground for further Treaty change to strengthen economic and fiscal integration across Europe, which may well result in another European referendum here in the not too distant future.”