Ministers cautious on promissory note deal

SENIOR FIGURES in Government, including Tánaiste Eamon Gilmore and Minister for Finance Michael Noonan, have urged caution about any early breakthrough with the troika over improving the terms of the €30 billion promissory note for the former Anglo Irish Bank.

Yesterday, Mr Gilmore, Mr Noonan and Minister for Communications Pat Rabbitte separately confirmed progress has been made with the European Commission, the ECB and the IMF, but all dampened expectations about new terms being agreed in the immediate future.

“We are at the point now where an Irish [request] is being converted into a European and IMF policy paper and when we get it as an agreed paper between ourselves and the troika authorities, we’ll then have to get political support behind it.

"So it is a project, where if we're successful it will be in the medium term rather than immediately," Mr Noonan told RTÉ's The Week in Politics.

Mr Gilmore said negotiations were ongoing but refused to put any deadline on when they would be concluded.

Mr Rabbitte told the The Irish Timesdiscussions had reached a stage where the issues were crystal clear but reports on an early outcome were "all speculation".

“Given the labyrinthine processes that have to be gone through, nobody at this stage can say that a deal can be done or is near being finalised,” Mr Rabbitte said.

Negotiations with the troika over the promissory note began in earnest last autumn and centre around lower interest rates and a longer repayment term for the €30 billion sum.

At present, the estimated cost of interest for the loan is at least €17 billion and the first yearly tranche of €3.1 billion is scheduled for payment at the end of this month.

Mr Noonan said last night that talks on the promissory notes had also opened discussions on how Irish banking and the State would benefit it the deal were agreed.

One suggestion on the table would be to transfer loss-making tracker mortgages from domestic banks to the Irish Bank Resolution Corporation, the vehicle that is being used to wind down Anglo Irish Bank and Irish Nationwide.

“They see other benefits apart from the sustainability of the debt It would give you banks that would have value, and further down the line it would be possible to sell the State’s shareholdings in those banks at considerable amounts of money,” he said.

Mr Rabbitte said he hoped a successfully negotiated result on this issue would give a “tremendous psychological boost to the country, apart entirely from the implications for the country’s finances”.

Responding to weekend reports of divisions and tensions emerging between the Minister for Social Protection Joan Burton and other Ministers, including the Tánaiste, over remarks she made linking the fiscal treaty referendum and the promissory note, Mr Gilmore said “a very big mountain had been made of a very small molehill”.

“She gave an observation, but some people have drawn all kinds of conclusions and implications from that,” he said.

Asked on RTÉ if Ms Burton was correct in saying a deal on the promissory note would improve the mood music, Mr Gilmore was more circumspect.

“Any good news, whether it’s in relation to promissory notes or it’s a good result for a football match in the course of the summer, will improve the mood music,” he responded.

He said the treaty would stand or fall on its own merits and that he would be bringing proposals to Cabinet shortly on a Bill to allow the poll take place and a timetable for it.

A spokesman ruled out that this would happen at tomorrow’s meeting.

Asked if Ms Burton was isolated in Cabinet, Mr Rabbitte said: “There is no question of Joan Burton being isolated.”