Irish finance minister says it will be “very difficult” to pay €3.1bn Anglo promissory note in March 2013

Minister for Communications, Energy and Natural Resources Pat Rabbitte rocked the boat a fortnight ago when he appeared to adopt a unilateral position in saying that the next €3.1bn instalment due in March 2013 by the State to what was Anglo Irish Bank in respect of the promissory notes “would not be paid”. Mind you, he said in the next breath that we didn’t pay the last instalment in March 2012 which reversed much of the hope that developments were afoot. [Note to Government: we did pay the promissory note last March 2012 in the same way we paid Gardai and nurses last month from a pool of taxes and borrowings; we borrowed the cash to pay the promissory note last March, just as we partly-borrowed the cash to pay Gardai and nurses last month]

Since then, the Government has been all at sea, not knowing if it should be claiming the debt is sustainable or unsustainable and the talk of technical reengineering is becoming very stale indeed – after all, we have been hearing claims of progress since September 2011 framed around the same niggling phraseology.

Yesterday in the Dail, the Fianna Fail finance spokesperson Michael McGrath asked the Minister for Finance Michael Noonan straight out – would the promissory note be paid in three months time. The response from Minister Noonan was unhelpful, but there was the admission from the finance minister that the payment would be “very difficult”. It’s not much, but it’s more promising than An Taoiseach’s harsh rejection of the notion of debt relief stridently declaring we won’t have defaulter stamped on our foreheads.

The great and the good involved in, and on the periphery of the negotiations with the ECB seem convinced that some progress is expected, and it is likely to be in the shape of a much longer repayment period to deal with the infernal promissory note. It remains unclear however if any actual reduction in the overall debt burden will come about through the negotiations, as the ECB is prevented from outright concessions and it risks an avalanche of requests from other EuroZone countries seeking similar treatment to Ireland.

The full parliamentary question and response are here:

Deputy Michael McGrath: if, in the absence of an agreement with the European Central Bank to restructure the liability, it is his intention to pay the €3.1 billion due to the Irish Bank Resolution Corporation on 31 March 2013 in respect of the promissory note

Minister for Finance, Michael Noonan: I have previously stated that I am working to try and achieve a solution before the next scheduled instalment on the Promissory Note scheduled for next March. It would be very difficult for Ireland to make a payment on that date and so we continue to work on a deal with our European partners. I remind Deputies that the Government, together with all other 26 member states at the Euro Summit in October last year committed that:

As far as our general approach to private sector involvement in the euro area is concerned, we reiterate our decision taken on 21 July 2011 that Greece requires an exceptional and unique solution. All other euro area Member States solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.

The Irish Government will honour this commitment and will ensure that we work with our EU partners to address the situation in relation to the overall cost to the State of resolving the difficulties in our banking sector. This Government has consistently worked towards a consensual approach to decisions made with our European colleagues.

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