MINISTER FOR Finance Michael Noonan has indicated it may still be possible for the Government to win EU agreement to delay a €3.1 billion bank debt due within days, an idea rejected by the European Commission this week.
Speaking to reporters after meeting his French counterpart François Baroin in Paris yesterday, Mr Noonan declined to rule out an agreement to delay the payment, due on March 31st, pending a deal on Dublin’s ambition to restructure the banking debt.
Mr Noonan said his officials were negotiating with the troika to replace the promissory note with another instrument, extend the maturity date and keep the interest rate quite low.
We are negotiating with the ECB to make a different arrangement for repayment of the loan over a longer duration and at lower interest rates. We might pay more over 30 years but...it would change our debt profile, he said.
The Government’s hopes of a delay in the March payment were dealt a blow this week when EU economics commissioner Olli Rehn rejected the notion, but Mr Noonan said that may not have been the intended message.
“I think he was a bit frayed at the press conference and was caught unawares, and didn’t put things in context. He is conscious of that himself.”
The money must be repaid under an EU-backed arrangement under which Anglo Irish Bank and Irish Nationwide Building Society were recapitalised with expensive IOUs known as promissory notes.
“The ECB were never particularly happy with the level of collateral provided by the promissory notes, and they would like stronger collateral. Our job is to ensure that the changes they’re looking for will align with our interests, and that we don’t get change for the sake of change or for the sake of the ECB.”
Mr Noonan reported “good progress” in making Ireland’s case for bank debt restructuring to France. “If it was a case of Ireland going around to 26 capitals in Europe looking for support for an Irish proposal, the chances of success would be very slim. But if it’s a European and IMF policy document, and the European authorities as well as Ireland are seeking support…then it would be easier to elicit support.
He also said he expected to revise down the Government’s 1.3 per cent annual growth forecast when figures are updated next month, but the 2012 budget deficit target of 8.6 per cent of gross domestic product would be met.
