A new Government plan to avoid paying the €3.1bn due on the Anglo Irish Bank promissory note at the end of this month is to be put to the European Central Bank tomorrow.
It is proposed that instead of making the payment, the State will issue a bond that would not have to be repaid until 2025.
In a surprise move, Minister for Finance Michael Noonan announced the plan in the Dáil tonight. However, it will require ECB agreement tomorrow.
He said that while talks on the general issue of bank debt were continuing, there was now engagement principally with the ECB on how the promissory payment of 31 March could be dealt with.
The State is expected to put €3.06bn into the Irish Bank Resolution Corporation (formerly Anglo) at the end of the month, which is the first of ten annual payments.
Mr Noonan said it was examining whether this first payment could be settled by the delivery of a long-term Irish Government bond.
It is a significant development in the Government's campaign to lighten the burden of Ireland's banking debt.
Although it is a proposal yet to be agreed, the fact it has been announced in the Dáil shows confidence a deal could be done.
An agreement would buy the State 13 years and give the Government more room for manoeuvre.
The proposal is being raised with the ECB by Central Bank Governor Patrick Honohan.
Reacting to tonight's news, Sinn Féin's Finance Spokesperson Pearse Doherty called on the Government to "provide more detail on the arrangement being proposed so that the public can judge the actual impact of the arrangement on the public finances".
Fianna Fáil's Finance Spokesman Michael McGrath said the final outcome of the negotiations must result in a reduction in the actual burden of bank debt.
He said postponement of the payment would give Ireland some breathing space to conclude a comprehensive settlement on the banking debt.
