Tuesday, 17 July 2012

Questions (103)

Thomas P. Broughan

Question:

107 Deputy Thomas P. Broughan asked the Minister for Finance if he will outline his key broad objectives during current negotiations on bank debt here and the promissory notes; if he can quantify any overall targets he may have for the reduction of Ireland’s interest payments on the national debt for that portion related directly to the blanket bank guarantee and for a cut, elimination or deferment of promissory note payments; and if he will make a statement on the matter. [34808/12]

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Written answers (Question to Minister for Finance)

As the Deputy can appreciate, the welcome recent development from the Euro Area summit of 29th June, represents a major shift in European policy in terms of breaking the vicious circle between the banks and the sovereign. The Irish Government and its officials have been working extremely hard to secure a deal on the Irish bank debt. This agreement provides an opportunity for the issue of the bank debt to be addressed at an EU level. As part of the 7th Review of the Irish Programme which successfully concluded last week, technical work commenced with the troika and this work will intensify over the summer in advance of the September Eurogroup meeting. It has been agreed that when an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area, the European Stability Mechanism (ESM) could have the possibility to recapitalise banks directly. While the policy position is very positive indeed, it would not be possible at this stage of the process to attempt to quantify the benefits which will accrue to the Irish economy. The details of how to separate banking from sovereign debt must now be discussed in detail.

Nevertheless, preliminary discussions on how to separate Irish banking debt from sovereign debt are underway, with a view to concluding in October. However I do not want to prejudice those discussions at this time by commenting on the likely contents of any agreement. The amount of our banking debt which could be considered under this agreement will be identified during the detailed discussions but I would not want Ireland to be constrained by setting a target figure. As the details have yet to be worked out, it is too early to say what the precise implications will be.

I can assure the House that we will seek to be ambitious in our negotiation and will seek to agree the best deal possible for the Irish taxpayer. As and when further measures are agreed/solutions emerge I will inform the Houses as appropriate.