Replacement of promissory note payment with Government bond a modest step in the right direction

The announcement this afternoon in the Dáil by Minister Michael Noonan of the replacement of the €3.06 billion due on March 31 under the IBRC promissory note arrangement with a long term government bond is a modest step in the right direction and must be built upon to deliver a far more ambitious and comprehensive overall deal on reducing the burden of debt, according to Fianna Fáil Finance Spokesperson Michael McGrath TD.

Deputy McGrath stated, “The replacement of the €3.06 billion payment due this weekend with a Government bond is a welcome first step. However, this interim arrangement must be used as a catalyst to secure an overall deal that actually reduces the burden of banking debt facing the State.

“The financial arrangement that is proposed involving NAMA, Bank of Ireland and possibly the ECB is convoluted and we will be examining the details as soon as they are available. It would appear that the arrangement will have a negative impact on this year’s general government deficit of €90 million (given that no interest was being booked on the deficit under the promissory note arrangement but some interest will be payable on the bond).

“The ECB and our European partners know that Ireland represents the best prospect of success among the three countries in an EU / IMF Programme of Assistance. They must also recognise that Ireland’s debt sustainability will be greatly enhanced by agreeing to an overall deal on our banking debt. This will also improve our chances of returning to the international bond markets in a meaningful way in 2013.”

Deputy McGrath also expressed his dismay that he and other opposition spokespeople were not allowed ask questions of the Minister in the chamber, “While the welfare of sheep on the Cooley Peninsula is a valid issue for Deputy Peter Fitzpatrick to raise, I do not think it unreasonable that it could have been put aside for a short while to allow questions be put to the Minister on an issue of such public importance as the €3.06 billion liability to IBRC due this weekend.”