Dáil Éireann Debate, Thursday - 29 March 2012
69 Deputy Finian McGrath asked the Minister for Finance the interest rate that would apply if a Government bond was issued in lieu of the payment due in respect of the 31 March IBRC promissory note payment; and if he will make a statement on the matter. [17380/12]
View answerAs the Deputy is aware the Government is committed to reviewing the approach to the Promissory Notes with a view to reducing the overall cost to the State. The Troika have agreed to engage in a process with Irish Officials to produce a common paper which will consider all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest rate etc. In tandem with this review, the European authorities have opened a discussion on how best the Irish banking system and the Irish State can benefit from having further improvements to certain elements of the banking sector. The overall purpose would be to improve the position of the banks in which the State has a major investment.
Under the terms of the Promissory Note the State to make cash payments of €3.06 billion each year to IBRC. The discussions with the European authorities on the general issue continue but we are now negotiating with the EU authorities on the basis that the €3.06 billion cash instalment due from the Minister to IBRC on 31 March 2012 could be settled by the delivery of a long term Irish Government Bond.
Current yields on Irish bonds are under 7%.
70 Deputy Martin Heydon asked the Minister for Finance in view of current negotiations with the Troika on the promissory note due to IBRC, if he will consider the issue of a recovery bond as a replacement bond, the repayment of which could be dependent on recovery and growth and linked to Ireland’s successful turnaround in the coming years; and if he will make a statement on the matter. [17461/12]
View answerAs the Deputy is aware the Government is committed to reviewing the approach to the Promissory Notes with a view to reducing the overall cost to the State. The Troika have agreed to engage in a process with Irish Officials to produce a common paper which will consider all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest, rate etc. In tandem with this review, the European authorities have opened a discussion on how best the Irish banking system and the Irish State can benefit from having further improvements to certain elements of the banking sector. The overall purpose would be to improve the position of the banks in which the State has a major investment.
Under the terms of the Promissory Note the State to make cash payments of €3.06 billion each year to IBRC. The discussions with the European authorities on the general issue continue but we are now negotiating with the EU authorities, and principally with the ECB, on the basis that the €3.06 billion cash instalment due from the Minister to IBRC on 31 March 2012 could be settled by the delivery of a long term Irish Government Bond The current long term Irish Government bond yields are just under 7%. The Deputy will appreciate that the details of the arrangement have still to be worked out.
In terms of a recovery bond, there has been no indication in any of our discussions with our Troika partners that a bond the repayment of which is dependent on recovery and growth would be acceptable to them. While the objective in restructuring the promissory notes is to defer a repayment schedule until the economy is better placed in terms of growth and employment the obligation on and commitment of the State to meet a defined repayment schedule is an essential element of any restructured arrangement. This essential element not only provides comfort to our external partners but also acts as a focus for ourselves as a nation in our commitment to regaining economic independence.
