Róisín Shortall
Question:76. Deputy Róisín Shortall asked the Minister for Finance the total value of the promissory note deal as it was applied in Budget 2014. [44059/13]
View answerThursday, 17 October 2013
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Written answers
Prior to the promissory note restructuring I would have had to make provision for a cash payment of €3.1 billion to IBRC in 2014 consisting of €1.8 billion in interest and €1.3 billion in repayment of principal. Under the statistical rules governing the Deficit calculation only promissory note interest costs of €1.8 billion would have been recorded in 2014. The NTMA issued eight new Floating Rate Treasury Bonds to the Central Bank of Ireland in February 2013 to replace the Promissory Notes previously held by IBRC. The bonds have maturities ranging from 25 to 40 years and pay interest every six months based on the six month Euribor interest rate plus an interest margin which averages 2.63% across the eight issues.
As a consequence of this restructuring interest costs are much reduced to circa €0.9 billion next year and it is this revised interest cost that is reflected in the deficit estimate of 4.8% of GDP in 2014.
Additionally, there is a significant benefit to government debt over time due to the lower interest payments, and because the annual cash-flow burden that is required to be funded by the State is much lower as a result of the restructuring.