Tuesday 20 February 2018

Enda Kenny confident of deal on Anglo-Irish promissory note and full return to bond market next year

Jamie McGeever and Padraic Halpin

TAOISEACH Enda Kenny is confident Ireland can strike a deal easing the terms of the Anglo Irish promissory note by March.

Mr Kenny added that he also expects Ireland to return fully to bond markets late next year but needs a deal on easing our bank debt to make sure we can successfully exit the international bailout.

Speaking days before the country takes over the EU presidency, Mr Kenny called on European leaders to stick to a separate promise to look at improving Ireland's costly bank rescue.

"We would hope to be the first country to actually exit (a bailout) in 2013 but that level of support that has been committed to Ireland is very necessary to be carried through," Mr Kenny said.

"This assistance and this support is very necessary for Ireland to exit the programme," he said, adding that Dublin would not need to seek a second bailout.

Ireland takes over the rotating EU presidency in January for a six-month period in which it hopes to strike the bank debt deal with the European Central Bank and pave the way to exit its EU/IMF rescue programme on schedule at the end of 2013.

While the Government has been chiefly focusing on trying to change the punishing repayment terms associated with the promissory notes, it also hopes to retrospectively benefit from a proposal to allow euro zone rescue funds to recapitalise at-risk banks.

A June agreement by euro zone leaders to look at improving the terms of Ireland's bank rescue helped its bond yields fall sharply and allowed it to become the first bailed-out state to borrow on long-term bond markets.

It also began to pre-fund a sizable chunk of the financing it will need once the €85bn bailout ends next December.

But Ireland is not yet in a position to resume monthly bond auctions and the IMF warned this week that durable market access depended greatly on Europe delivering on its commitments to the country.

Mr Kenny said he envisaged Ireland making a sustained return to debt markets in the second half of 2013, adding that a deal on the €31bn of promissory notes would help this greatly.

"It would be much easier to do that if we have a conclusion to the matter of the promissory notes and ECB negotiations which would obviously make it easier for us to have a full return to the markets... probably in the second half of the year."

Speaking at government buildings where Brian Cowen had to accept a humiliating bailout two years ago, Mr Kenny said he hoped Ireland's EU presidency would be one of solutions, not least when it comes to finalising a seven-year EU budget early next year.

Asked if one of those solutions would be clarity on whether Spain would seek a full bailout, Mr Kenny said he was not sure that Mariano Rajoy intended to do so "at least as yet" but that he had told the Spanish Prime Minister of the intensive and invasive conditions that come with seeking help.

Holding the presidency will not stop Mr Kenny pushing Ireland's agenda and he hopes to gain some certainly as to whether Irish banks can be retroactively recapitalised when Europe is able to use rescue funds to shore up struggling lenders in 2014.

"I'm glad that the supervisory mechanism has been put in place. While that may not be concluded by the end of 2013, that does not preclude the question of the (as yet unclear) definition of legacy assets being (put on the table)," he said.

Mr Kenny said there were signs that confidence was returning to the country, pointing to recent fund raising by banks and modest economic growth.

However, Ireland desperately needs growth to accelerate if it is to unwind the biggest deficit in the euro zone and eat into a government debt that is forecast to peak at a dangerously high 121pc of gross domestic product next year.

While its austerity plan is held up as an example by euro leaders, Kenny said that with unemployment "unacceptably" high at nearly 15pc and many families facing difficulties, he has to remind colleagues how fragile Ireland's position still is.

"The Irish people have shown great patience and understanding of the difficulties that the government faces. No Prime Minister of the last 50 years has faced the challenges that my government faces," Mr Kenny said.

"I remind our colleagues abroad internationally and in Europe that while Ireland has made good progress, solid progress, we are still in a fragile position."

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