Promissory note negotiations are proceeding satisfactorily - Noonan

Monday 04 February 2013 21.48
Michael Noonan said he expects 2013 will be the year when the economy turns
Michael Noonan said he expects 2013 will be the year when the economy turns

Minister for Finance Michael Noonan has said there is no payment due on the promissory note until 31 March, and negotiations on a deal are proceeding "satisfactorily".

Mr Noonan said he is very appreciative of the fact that the European Central Bank is engaging with Ireland.

He said it is fully aware that the issue is around the sustainability of the Irish debt position.

Mr Noonan said at the same time Ireland had to have regard for the ECB's legal position and independence.

The minister said he feels Ireland will get an appropriate deal on the promissory note in due course, and people should not be trying to bring the issue forward.

Mr Noonan was speaking after Fianna Fáil finance spokesperson Michael McGrath revealed that he received a reply from ECB President Mario Draghi.

In the letter, Mr Draghi said the ECB has given extraordinary support to the Irish banks over recent years.

The letter comes ahead of a meeting of the governing council of the ECB, as Ireland steps up efforts to secure a deal on the promissory notes used to finance the former Anglo Irish Bank.

Last month, Mr McGrath wrote to Mr Draghi to say that continuing to meet the repayments under the promissory notes made no logical sense.

Mr Draghi's reply gave little away, but it did refer to obstacles that the Government faces in its talks with the ECB.

He said in their current form the promissory notes were non-marketable, which means the ECB cannot cash them in.

It is understood that is something the ECB would like to change if there is a new deal.

Mr Draghi said he was in close contact with the Central Bank and would continue to discuss what was achievable within the confines of the treaties governing monetary union.

This is viewed as a reference to the restriction that the ECB cannot finance governments.

But Mr Draghi said the support already given to Irish banks in the form of monetary policy and emergency liquidity loans has been extraordinary.

In response to Mr Draghi's letter, Mr McGrath called on the Government to initiate face-to-face negotiations with the ECB in its efforts to secure a deal on the promissory notes.

Mr McGrath said efforts to secure a deal ahead of the March payment deadline had been handled by officials up to now.

He said the Government had staked a huge amount of political capital on securing a deal on the promissory notes and would be severely damaged if it fails to get that deal.

When asked if he believed the Government should go if no deal is struck, he said talk of a general election at this stage would be irresponsible.

He said the Government's absolute focus should be on getting the best deal for Ireland as quickly as possible.

Mr McGrath said there was widespread support within the EU for a deal to be done for Ireland on the promissory note, and the Government should capitalise on this.

Speaking later pn RTÉ's News at One, he said that the ECB "was not immune" to political influence.

Deal on notes extremely important - O'Sullivan

Meanwhile, Labour Minister Jan O'Sullivan said it is extremely important that the Government gets a deal on the promissory note and that is why negotiations are so intense at present as the time frame for securing a deal is so short.

It is a burden on the Irish people and they want to see it addressed, she said.

"We want to fight for our country to get a better deal and we are all on duty in this regard as we know the time frame is so short", she said.

Minister for Justice Alan Shatter said he did not think there was any question of Government stability being jeopardised.

Minister for Transport Leo Varadkar said that while a failure to secure a deal would be a big blow to the Government, it would not be "catastrophic".

Speaking on the same programme, Mr Varadkar said he wanted to be careful about raising expectations.

He said a deal will not mean that there will be no more austerity budgets, and neither would it mean an end to tax increases and spending cuts.

Mr Varadkar said: "We still have that primary deficit, that big gap between what we take in in taxes on one side and what we spend on the other.

"I'd be careful not to raise expectations, that if we do get a deal on the promissory note by March, that somehow this means that we're going to see a sudden end to cuts in spending or a sudden end to tax increases, that isn't the case unfortunately."

Meanwhile, Mr Noonan has said he expects 2013 will be the year when the economy turns and he foresees 2014 and 2015 as being very good years for Ireland.

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