MINISTER FOR FINANCE Michael Noonan has announced a deal has been agreed on the €3 billion promissory note payment which was due to be paid by Saturday.
The payment of the promissory notes are to be deferred and have instead been swapped for a long-term government bond.
Michael Noonan made the announcement in the Dáil just after 4pm today. (Watch the Dáil chamber live here).
He told the chamber: ”There is a very definite gain in debt sustainability”:
The use of an Irish Government bond in relation to the promissory note payment allows the wider discussions to continue between the Irish Authorities and the Troika, both on the promissory notes arrangement and on how to advance the return to normality of the Irish banking system thus improving the availability of banking services in support of economic recovery.
Noonan said that the long-term bond had a number of significant advantages, most notably a significant cash flow benefit to the Exchequer in 2012.
“Put simply, €3.06 billion will be settled by delivery to IBRC of a long-term Government bond with an equivalent fair value,” said the Minister.
The government had been negotiating with the European Central Bank for some time over the payment.
The promissory note was used to fund the Irish Bank Resolution Corporation – formerly Anglo Irish Bank and Irish Nationwide – when the financial institutions came close to running out of money.
The arrangement requires the State to make cash payments of €3.06 billion each year to the IBRC.
The new deal will aim to reduce Ireland’s debt burden from the banking crisis. Several government TDs have suggested that a deal on the promissory notes would help the government secure a Yes vote on the upcoming fiscal compact referendum.
More on this as it happens…
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