THE GOVERNOR of the Central Bank, Prof Patrick Honohan, has said he does not regret his decision in November to go on radio and confirm that the EU and the IMF were preparing a bailout package for Ireland.
He told the Oireachtas Committee on Finance, Public Expenditure and Reform that he welcomed a question from Sinn Féin’s Pearse Doherty, who asked if he felt his intervention had damaged the government’s negotiating position at the time.
Prof Honohan said he was quite satisfied and really had no doubt that his decision to go on radio and tell the Irish people and international observers what was happening was very valuable at that point.
He said that over the previous number of days there had been intensive preliminary negotiations over the loan, and there was “a sense that something was stalling, that the Irish government might somehow not go ahead with the deal”.
He said this view was causing a heightened sense of concern in many quarters that there was going to be a “big meltdown”.
There was concern in the markets and among European policy makers and among his colleagues in the European Central Bank. “I was telling my colleagues in the ECB don’t worry, the negotiations are going fine.” However, the concerns persisted and he decided that he had to speak out and tell people what was going on.
He did not accept the proposition that he had undermined the government’s negotiating position. He did not think the deal that was eventually arrived at was a bad one, but he did think there were a lot of missed opportunities.
He said one idea he had at the time was that there could be a direct injection of European money into the banks, rather than through the Irish government, as this would mean the European institution injecting the money would get the shareholdings in the Irish banks, and the risk to the Irish State would be reduced.
He said he had a “small regret” that he might have wrong-footed the then minister for finance, the late Brian Lenihan, although Mr Lenihan, he said, could have made the announcement the previous day.
Prof Honohan told Kieran O’Donnell TD it was not trying to “nudge” Mr Lenihan into doing something he had not wanted to do.
It was Mr Lenihan who had given the green light to the preliminary negotiations that had been going on at the time.
