If this motion is passed, seeking to lobby the ECB for an exemption from monetary financing to allow the Central Bank to destroy €25 billion in sovereign bonds validly issued by the State and for the Government to unilaterally cease payments on the interest associated with that sovereign debt would be detrimental to the recovery of Ireland and its ability to obtain funding from international financial markets. This approach would jeopardise all the work that has been done so far by the State and the Irish people to restore not only our economy, but our reputation abroad. Reputation, reliability and meeting commitments are essential elements in accessing financial markets. We have regained the trust of our European partners and have demonstrated that Ireland is a country that can be trusted. Any motion such as this, if passed, would certainly break that trust and raise serious questions about meeting our legal obligations. We cannot undermine the remarkable achievements that have been made to date.
The promissory notes were designed and issued by the previous Government as a funding instrument to provide capital to Anglo Irish Bank and Irish Nationwide, to be repaid over time at an annual cost of €3.06 billion. The cost of this commitment imposed a massive burden on the State and the Irish taxpayer. Despite this, the Government has always maintained that it will respect the sovereign commitments entered into by the State regardless of by what Government these commitments were made. This strategy is finally paying dividends. Why pass a motion which would destroy the reputation we have worked so hard to build?
Government bonds yields are now much lower than the rate of interest that applied to the promissory notes when issued, thanks to the hard work done by Ireland in restoring its standing abroad. This Government and its officials worked tirelessly to reach agreement with our European partners on a restructuring of the promissory notes which provided a fairer and more affordable solution which significantly reduced the debt servicing costs of the State and the NTMA's market borrowing requirements over the coming years.
It was never a realistic possibility that the Government demand a rejection of the promissory notes in total. The reality is that the notes were a sovereign commitment and have formed part of general Government debt since issued in 2010. This Government resisted calls to adopt a confrontational approach in its negotiations around the promissory notes as it recognised that a sustainable solution had to be achieved by leveraging the support of our international partners. It was clear to the Government that the co-operation and support of our European and international partners was essential to reaching a solution that was in the interests of all. The Government has always set out clearly that it would not act unilaterally and that it would be bound by agreements entered into by it and previous Governments.
Our strategy has paid and is paying real dividends. The agreement on the promissory notes in February is a major step in regaining our economic independence through improving the affordability of our debt position and reducing our debt servicing costs. That agreement was reached after months of tough political and technical negotiations with our European partners and resulted in the replacement of the promissory notes with sovereign bonds of longer duration and with a lower interest rate. The benefits of the current arrangement are numerous. The agreement has greatly improved Ireland's means of dealing with the debt we inherited from the promissory note by reducing our borrowing requirement and debt servicing costs. The elimination of the annual promissory note payment has reduced the State's cash borrowing requirement by €20 billion over the next ten years. Any motion which questions the Government's commitment to following through on the agreement has the potential to derail our ability to regain full market access.
During the first quarter of 2013, the National Treasury Management Agency raised €7.5 billion from two bond sales. Both of these bonds attracted strong international interest and were heavily oversubscribed. Most importantly, more than 80% of the demand came from overseas investors. These sales confirmed Ireland's ability to access long-term market funding on sustainable terms. The NTMA is now in a strong funding position and Ireland will end this year with a cash buffer sufficient to cover 12 to 15 months of Exchequer financing needs. This strong position has been instrumental in the Government's decision to exit the EU-IMF bailout programme on 15 December without an application for a precautionary credit line. I noted with interest how only three members of the Technical Group voted to exit the EU-IMF programme last week. Should we take it that the other Members of the group endorse the programme and wish to continue under its guidance? Has the Technical Group proposed today's motion to cease interest payments on legitimate sovereign debts as a way of jeopardising our exit and keeping us in a programme?
The decisions taken by this Government in conjunction with our European partners have been instrumental in the restoration of confidence in the Irish banking system. There has been a significant reduction in reliance on euro system funding by the remaining banks, and the liquidation of the Irish Bank Resolution Corporation has led to the complete removal of emergency liquidity assistance, ELA, from our banking system. As part of the 2011 financial measures programme, Irish banks were recapitalised to meet a capital requirement identified at €24 billion. This was sourced from the private market, burden sharing with subordinated bondholders and also from the State. We have also implemented the merger of Allied Irish Banks with the EBS Building Society. AIB recently announced the completion of its deleveraging plan under the financial measures programme, ahead of the December 2013 target date. Bank of Ireland and AIB have successfully reengaged with the markets on the back of their own asset-covered securities. More recently, unsecured offerings in AIB and Bank of Ireland were oversubscribed. Furthermore, the sale of Bank of Ireland's convertible contingent notes early this year reflects the renewed belief in the sustainability of the Irish pillar banks. Private capital has also been introduced to the banking system through the sale of equity in 2011 and the sale of Irish Life in 2013.
All of these developments have strengthened Ireland's ability to access long-term market funding and illustrate how successful we have been in our efforts to re-enter the financial markets. These achievements were based on the Government's commitment to ensuring Ireland is an attractive place in which to invest. That is the basis on which the country's future financing strategy is built. Any motion which threatens to cease payments of interest on a sovereign liability of the State is akin to default and brings with it substantial threats to our international reputation, which we have worked tirelessly to restore.
Let us not forget that the majority of Government debt is related to the provision of public services. Access to financial markets is essential for the running and maintenance of those services. It is the responsibility of Government to ensure, to the best of its ability, that public services are maintained and international debt finance is accessible. Policy decisions must ensure that access to funding is stable. The passing of this motion would threaten that stability.
We have had constructive engagements with our European partners since we entered government. In addition to the restructuring of the promissory note, we also managed to deliver many other successful agreements through partnership. We have achieved a renegotiation of many of the conditions of the EU-IMF programme such as the reversal of the minimum wage cuts. A substantial reduction in the interest rates on the EU funds, estimated to be worth in the order of €9 billion, was also won. The extension of the maturities of our European financial stability facility and European financial stabilisation mechanism loans of up to seven years is yielding significant savings. In addition, the agreement to retain half the proceeds from State asset sales for investment in job creation projects was an important concession.
These arrangements were agreed on the trust and understanding the Government has managed to build up with our European partners over the course of recent years that we will follow through on our commitments. This motion, if passed, would have a detrimental impact on that trust and significantly impact the Government's ability to negotiate in the future. We must persuade investors that Ireland is an attractive place in which to invest. Defaulting on our debt or lobbying to renege on that debt is not a message we want to deliver to the international community. It would damage investor confidence and seriously hinder our ability to attract foreign investment. Ireland cannot improve its economy by going it alone. We need our European partners' agreement and support if we are to build our financial position successfully. Foreign direct investment plays an important role in our economy, supporting 250,000 jobs directly and indirectly. Any default or threat of default on a sovereign obligation would threaten not only the thousands of foreign investor jobs in our economy but also future investment and employment opportunities for Irish citizens.
Today's employment figures show the improvement in the economy is real. Unemployment has fallen to 12.8%, the lowest figure we have seen since the second quarter of 2009. This is clear evidence that we are making the right decisions, boosting confidence and rebuilding the economy. The proof of that is in the increase in employment, which should have a positive effect on consumer spending and retail sales and serve to reduce mortgage arrears. Employment has grown by 58,000 in the year and now stands at 1,899,300. Moreover, the majority of the new jobs created are full-time positions.
We are not done yet and this Government continues to push for further agreements with our European partners. It is clear that our decision to work collaboratively continues to bear fruit. That is evidenced by recent discussions between the Taoiseach and Chancellor Merkel which may give rise to potential funding mechanisms for the State, including access to finance for Irish SMEs through the German development bank, KfW. That initiative is in the very early stages of development and the Government hopes it can provide a sound funding basis for SMEs into the future. Any announcement that Ireland was proposing to row back on its commitments and potentially default on its sovereign debt could have serious implications for the goodwill that surrounds the initiative. We are working hard to get agreement on these issues. The assistance being offered to us is illustrative of the trust our European partners have in Ireland's ability to turn around its economy and their willingness to aid us in that effort where possible. Any lobbying now to cancel the €25 billion bond repayments would seriously hinder the possibility of future offers of assistance of this nature.
Judgment was delivered today in respect of Deputy Joan Collins's challenge to the promissory note payments, a case that was taken against the Minister for Finance and the Attorney General. The plaintiff sought in these proceedings to challenge the lawfulness of providing public funding to IBRC and EBS in the form of promissory notes. The plaintiff also challenged the lawfulness of the subsequent issuing of long-term Government bonds to the Central Bank of Ireland in exchange for the IBRC promissory notes. The judgment was delivered in favour of the State by Mr. Justice Peter Kelly this morning.
European solidarity is in our interest and to our benefit. Economic growth will only be successful in the long term if the international markets are persuaded that we will adhere to our debt repayments.
We need to look to the long-term implications of lobbying for a default. We have gone to considerable lengths to improve our economy and debt repayments. It would not be wise for the State to lobby our European partners further on the issue now that agreement has been reached. Finally, it would not be rational for the State to abandon diplomacy and consider ceasing on payment on its contractual obligations at this critical time.
