Wednesday 25 April 2018

Debt levels can be reduced without ESM deal -- Noonan

Construction site at the new headquarters of the European Central Bank in Frankfurt
Construction site at the new headquarters of the European Central Bank in Frankfurt
Colm Kelpie

Colm Kelpie

FINANCE Minister Michael Noonan has said debt levels can be reduced significantly even if a deal can't be done with Europe to recover some of the crippling cost of bailing out the banks.

At a press conference marking the end of the bailout, Mr Noonan said the Government was still trying to get a deal on retroactive recapitalisation but it wasn't the only option being considered.

It is one of the strongest signals yet that the Government may be moving away from the idea of trying to get support for its historic banking debt from the European Stability Mechanism (ESM), amid political opposition, most notably from Germany.

"Without any retroactive recapitalisation of the banks, we think we can get the debt down very, very significantly and in my view it's entirely sustainable," Mr Noonan said.

"Yes we're pursuing it, but it's not the only method we have of making the debt more sustainable and taking it down to the European average and then proceeding in accordance with the stability treaty until we get down to 60pc of GDP."

The debt is expected to peak at 124pc of the value of the economy next year.

His comments come just days after the head of the ESM said it was unlikely that Ireland would be able to tap into the fund for the historic debt.

In Brussels earlier this week, the minister said the ESM regulations allowed for retroactive recapitalisation, but he said the details of how and when it would operate had yet to be thrashed out.

Mr Noonan said steps had already been taken to ease the debt burden, including the extension of the maturities on some of the European bailout loans, agreed earlier in the year.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business