Minister for Finance Michael Noonan has reported progress in his talks with the European Central Bank on the debts of Anglo Irish Bank, saying the ECB is more eager to move forward now than previously.
Mr Noonan said he hoped to advance talks with the ECB in the next fortnight. While there was no deadline for an agreement, he said a deal before the Budget in December would suit him.
Some technical issues have been resolved with the ECB but others remain to be settled, the Minster added.
“I believe at the end of the day we’ll get a deal. The quality of the deal is the issue. But we’ll keep working at it,” he told reporters.
“I must say there is very strong support now at political level for an arrangement for Ireland to make its debt more sustainable.”
Leaving Nicosia yesterday afternoon after two days of talks on the debt crisis between finance ministers and central bank governors, Mr Noonan said all parties in the talks were pursuing a “workable” arrangement.
Mr Noonan held a series of meetings on the margins of the EU talks with ministers and ranking ECB figures, among them executive board member Jörg Asmussen.
For many months the ECB has resisted a deal to restructure the €47 billion promissory note scheme. Such notes a form of IOU which the State is giving to the former Anglo so it can repay its debts.
However, Mr Asmussen pointed to increased urgency in the bank’s talks with the Government and said negotiators were under “heavy time pressure”.
According to Mr Noonan, this comment reflected strong support for Ireland.
“You’ve had evidence of that when Mr Asmussen addressed his press conference yesterday and talked about ongoing negotiations and the timeline being urgent,” the Minister said.
“So we’ll pursue that now over the next couple of weeks and there seems to be willingness more than there was at the central bank to engage with us and they’re being pressed by many of our colleagues around Europe.”
Asked how he interpreted Mr Asmussen’s remarks, Mr Noonan said the ECB board member was referring to the October timeframe for a debt relief deal which was mentioned in July by EU economics commissioner Olli Rehn.
“I think he was simply cross-referencing to the October date. But as I’ve said a number of times I see the October date as a target rather than a deadline,” Mr Noonan said.
“The quality of the deal is more important than the timeline on the promissory note because, as I’ve said, the next pressure point is when the €3 billion payment becomes due at the end of March.
“So that’s quite a long lead time. It would suit of course if I could get things one before the Budget.”
Mr Noonan indicated that International Monetary Fund chief Christine Lagarde was arguing in favour of the Irish case but said anyone he briefed on the situation was strongly supportive.
“On the official side I think it’s worth mentioning Christine Lagarde who has been supportive to the Irish position for quite a while and strongly supportive again and made her views known to ministers and to the Commission and the bank.”
Mr Noonan said the ECB seemed to be “more eager now to move forward” when asked how the ECB had expressed its new-found willingness to engaged with the Government.
“I presume that some of the people that I spoke to, whose assistance I was recruiting, spoke informally to the ECB, and particularly Ms Lagarde,” the Minister said.
He said it was too early to quantify the potential benefit to Ireland from a debt sustainability perspective.
Asked whether the ECB was finding a way around its own sensitivities in relation to the Anglo notes, Mr Noonan said the issue remained a complicated.
“As the technical work proceeds some difficulties are being removed but others still remain so we’ll continue to talk,” he said.
“It’s complicated to explain the promissory note, to design an alternative is complex as well. I’m not underestimating the difficulties at a technical level but there’s a willingness of all participants to make an arrangement that’s workable.”
Anglo is due to receive promissory notes worth some €31 billion over the lifetime of the scheme from the Government but the high interest rate on them means the total cost to the State will exceed €47 billion by the time the arrangement expires in 2031.
The ECB’s agreement is a prerequisite for any new deal because Anglo is reliant on emergency central bank funding to meet its day-to-day obligations. However, the ECB has been reluctant to rework the scheme as it is wary of providing cheaper medium-term funding to Anglo.
Mr Noonan said the latest EU/IMF “troika” review of the Irish bailout would trigger the release of a new €1 billion loan.
“From Ireland’s point of view you heard we got a lot of complimentary mentions but of course there’s a lot more to it than that,” Mr Noonan said of the Nicosia talks.
The meeting in the Cypriot capital followed bilateral talks in Paris, Berlin and Rome between Mr Noonan and his French, German and Italian counterparts.
“My purpose in the visits I made in Europe over the last few days and in the margins of the conference was to effectively explain why Ireland needed to make its debt more sustainable,” the Minster said.
“I reminded people of the commitment in the communiqué of the heads of state and government on the 29th of June and I recruited political support behind that position.”
He declined to comment on remarks by junior minister Brian Hayes which said well off elderly people should bear some of the burden as the Government seeks to assert control over the public finances
