THE GOVERNMENT’S strategy in negotiations with the troika remains focused on reducing the cost of the Anglo promissory note or lowering the State’s burden for the losses of private banks, a high-level source confirmed yesterday.
The source told The Irish Times that the “name of the game” from the Government’s perspective was to try to convince the trio of lenders – the European Central Bank, the European Commission and the International Monetary Fund – to consider new tools and instruments that would separate sovereign and bank debt; as well as looking at ways to restructure the €31 billion promissory note for the former Anglo Irish Bank and Irish Nationwide Building Society.
The source said that if the basis of the bailout loans was changed so the State would no longer have the same direct responsibility for the banking portion of the €67 billion bailout loan, it might achieve the same net effect as a restructuring of the promissory note.
The commission and the Government denied yesterday the troika was considering an extension of the maturity schedule of the EU portion of the bailout loan to 30 years. Asked about the report carried on RTÉ, Amadeu Altafaj, the official spokesman for EU economics commissioner Olli Rehn, said: “This is simply not true.” Another spokesman for the commission said: “Reports that the troika is considering changes to the loan repayment schedule for Ireland are not true.”
A spokesman at the Department of Finance referred to the statements from the commission and said the Government was unaware of any discussions or proposal in that regard. The sources pointed out the increase in the Irish loan term from 7½ to “up to 30 years” had been agreed by EU leaders at its summit last July.
In a response to a parliamentary question earlier this month, Minister for Finance Michael Noonan seemed to confirm this change. “When the programme was initially agreed [in November 2010] the average maturity of all loans was set at 7.5 years . . . Following the [EU summit] last July, it was agreed that the average maturities for the EU facilities should be extended . . . [and] will now be a minimum of 15 and up to 30 years.”
The Government had drawn down almost €49 billion of the €67 billion by the end of April and the average maturity period was just under 10 years. However, funds drawn since July last year have been for longer periods – the tranche in January 2012 had a maturity of 30 years.
The Government sources said it would be very problematic to refinance the loans already drawn down with a view to increasing maturity to 30 years, and said it was not really a “runner”.
Fianna Fáil finance spokesman Michael McGrath said the extension of maturity to up to 30 years had been agreed last summer and argued the Government needed to ensure repayment of future loans was at the longest allowable schedule. However, he said the only real “game-changer” that could be achieved would be a reduction in the burden imposed by the promissory notes.
“There’s still €28 billion of that in play that can be negotiated with the EU authorities,” he said.
Sinn Féin’s finance spokesman Pearse Doherty said the Government needed to reduce the debt burden and that would mean European institutions taking a “hit”.
“The [promissory note] is like having a mortgage for a house you never owned,” he said.
