The Finance Minister has told the Dáil that a €3.1 billion cash payment to IBRC, the former Anglo Irish Bank, due on March 31, will be deferred.

The payment will now be financed through the issue of a long-term government bond.

Michael Noonan said the move would allow wider discussions between the Government and the troika on the structure of the promissory notes being used to fund IBRC.

 

Mr Noonan said it would have only a €90m impact on the general government deficit this year, but it would help Ireland's debt sustainability.

He said the money from the EU/IMF deal earmarked for the payment could now be used to give Ireland greater flexibility on its plan to return to the bond markets.

Mr Noonan said the long-term bond would be financed for one year on commercial terms by Bank of Ireland, which in turn would deal with the ECB. The move has been approved by the board of the bank but is subject to the agreement of the shareholders.

As an interim measure, the financing of the bond will be a collateralised facility provided by NAMA to IBRC on equivalent commercial terms as the financing with Bank of Ireland. NAMA will facilitate this from its own funds.

 

Speaking to reporters at Government Buildings, Michael Noonan said the plan would not be a template for further payments the IBRC but was an important sign that the ECB recognises the promissory note arrangements were not set in stone.

He said he had been surprised at the speed at which Europe was progressing on plans for an expanded bail-out fund, and this was encouraging.

He said the European Financial Stability Fund could potentially be involved in a wider deal on banking debt and said it was involved in the current technical discussions.