THE GOVERNMENT has quietly downgraded its campaign to persuade the European Central Bank to change the terms of the €30 billion of promissory notes it issued to bail out Anglo Irish Bank, according to an authoritative Government source.

The efforts by Minister for Finance Michael Noonan to seek a reduction from the ECB in the 8.2 per cent interest rates being charged on the notes or extend the term of the loan has not really worked, said the source. In all, Ireland will have paid a total of €16.8 billion in interest when the debt matures in 20 years’ time.

It is understood the lack of headway with the ECB was a motivating factor for Taoiseach Enda Kenny bringing up the issue of Ireland’s €63 billion bank recapitalisation bill at the EU summit last weekend. The Taoiseach asked other EU leaders to allow a more sustainable way for Ireland to pay back the loans it has taken.

The Department of Finance said this week talks were continuing at official level with the ECB. However, the source said politically, the Government was not optimistic about a positive outcome.

When Mr Noonan first broached the issue with Jean-Claude Trichet in September, the Minister for Finance conceded that the then head of the ECB had been “pretty non-committal” on the promissory notes issue.

The source said while the Taoiseach had talked about a total of €63 billion, what was really at issue were the promissory notes for Anglo and Irish Nationwide.

“We will talk with the EU Commission and with the council secretariat about this issue rather than with the ECB,” said the source.

Mr Kenny has consistently said the €63 billion was borrowed before the EU-IMF bailout programme in November 2010. Department of Finance figures this week confirmed he has not been strictly correct in that assertion. An analysis shows only €42 billion of the €63 billion was borrowed as €21 billion came from the National Pensions Reserve Fund.