Wednesday 26 November 2014

Upbeat Merkel raises hopes of bank debt deal

Fionnan Sheahan and Daniel McConnell

Published 08/03/2014 | 02:30

German Chancellor Angela Merkel (R) and European Council President Herman Van Rompuy look on as Bono arrives at the European People's Party (EPP) Elections Congress in Dublin March 7, 2014. REUTERS/Suzanne Plunkett
German Chancellor Angela Merkel (R) and European Council President Herman Van Rompuy look on as Bono arrives at the European People's Party (EPP) Elections Congress in Dublin March 7, 2014. REUTERS/Suzanne Plunkett
German Chancellor Angela Merkel and Taoiseach Enda Kenny

GERMAN Chancellor Angela Merkel has reignited hopes of a deal on our bank debt that would ease the burden on the taxpayer.

The most powerful leader in Europe hailed Ireland's recovery as a "success" and said she was "positive" about moves to reduce the amount of money the country has to repay from the bank bailout.

The Government is looking for a generous backdated injection of funding from the new EU bailout fund.

Such a move would refund some of the banking bailout to the country, thereby reducing annual debt repayments by the taxpayer.

Without making an explicit promise on a debt deal, the chancellor's stance was significantly more open than that of her Finance Minister Wolfgang Schauble, who says Ireland is not entitled to any retrospective funding.

Taoiseach Enda Kenny interpreted the chancellor's comments as a sign she was "hopeful" there would be a debt deal.

Addressing the European People's Party (EPP) conference, hosted by Fine Gael in Dublin, Mr Kenny made specific reference to the more than €60bn injected by the taxpayer into the banking system.

Almost two years after EU leaders specifically included Ireland in a commitment to separate bank debt and sovereign debt, the Government is still awaiting delivery on the apparent promise of retrospective bank recapitalisation.

The Coalition is continuing to press for the debt deal as part of a package of measures to ease the burden in the wake of the bailout by the taxpayer of the banking system.

The Government secured a deal last year to stretch out the repayment of the €25bn bill for bailing out Anglo Irish Bank for up to 40 years.

But it has been pushing Europe to get a refund on the remaining €32bn of taxpayers' money that went into AIB, Bank of Ireland and Permanent TSB.

Attending the EPP event, a series of EU leaders praised our

exit from the bailout – not least the German chancellor. "I would like to use this opportunity of my bilateral visit to your country to pay you my respect and my admiration for what you have been able to achieve.

"This is thanks to the people of Ireland, who were ready and willing to embark on this very difficult course, and I think . . . the fact that Ireland was able to leave the troika programme is obviously a success story," she said.

Ms Merkel said Ireland and Germany were two countries with a strong working relationship. She said the cost of borrowing had dropped for Ireland and referred to the assistance her country was offering through business loans from the German development bank, KFW.

"Obviously that needs to be reflected and dividends need to be reaped by the people who are in business here, as regards loans, for example.

"This has to be made easier and Germany wishes to be of help here," she said.

Following a meeting with the Taoiseach, the chancellor said much work had to be done on putting the new banking supervisor in place. She said emerging from the bailout was "most important".

"That's a tremendous success story. You were able to emerge from this bailout," she said.

The chancellor appeared to suggest her support for a bank debt deal as she said a single supervisory mechanism had to be established before such issues could be examined.

"All of that is currently in the consultation process. And I can only say I have a positive outlook on the possible outcome.

"We have achieved much but we are not at the end of the road yet," she told the Irish Independent.

Mr Kenny said nothing could be done until the banking supervisor was in place. He said the process was under way and meetings were happening. "The chancellor is hopeful there will be a good result about queries that will be made at that stage."

The chancellor also supported Mr Kenny's view on the need to tackle corporation tax on an international level, but signalled changes were on the way in how companies handled their tax affairs. "We will have a level playing field. We are on the same page. We are on the right track," she said.

Irish Independent

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