Saturday 25 November 2017

Pressure on Michael Noonan to devise 'unique' debt plan

Hardline German Finance Minister Wolfgang Schaeuble signalled his government was positively disposed towards Ireland getting relief on our crippling debt burden.
Hardline German Finance Minister Wolfgang Schaeuble signalled his government was positively disposed towards Ireland getting relief on our crippling debt burden.

Fionnan Sheahan and Donal O'Donovan

THE Government has been told it will get a one-off bank debt deal -- but has to come up with a way to show our case is unique in the EU.

Hardline German Finance Minister Wolfgang Schaeuble signalled his government was positively disposed towards Ireland getting relief on our crippling debt burden.

But the Government, and particularly Finance Minister Michael Noonan, has to devise a way to get the money so that other countries can't use our case as a precedent.

The economy got another major vote of confidence when Mr Schaeuble insisted the country won't need a second bailout -- and will get a bank debt deal.

Following a meeting in Dublin with Mr Noonan, Mr Schaeuble reiterated German Chancellor Angela Merkel's statement that Ireland was a "special case" for a bank debt deal.

The government side was satisfied Germany would agree to such a deal provided it was unique and didn't open the door for another country.

A government source said: "He is basically saying: 'Come to us, find a unique way that distinguishes you from everyone else. He's very cautious about opening up any opportunities for other countries."

However, the Government faces a nervous wait until at least the second half of next year to tie down the detail of the deal.

Mr Schaeuble insisted there could be no reworking of bank debt until 2014, when a Europe-wide banking supervisor is in place.

Mr Noonan said the banking supervisor would be in place by the latter half of next year.

The issue of the country's legacy debt of funds in AIB and Bank of Ireland and the promissory note of cash injected into Anglo Irish Bank was discussed at the meeting.

The Government was pleasantly surprised Mr Schaeuble actually repeated the "special case" phrase of Ms Merkel, as he has been known to express different views to his chancellor.

"There is no ambiguity in relation to the position set out last week. It was the same language coming across," a government source said.

The backing of the German finance minister is arguably even more important as the detail of any deal will be hammered out by EU finance ministers.

His strident view that Ireland would emerge from the bailout was also helpful.


"It puts pressure on everyone involved to ensure Ireland does get out," the source added.

Mr Schaeuble stood firmly by Ms Merkel's stance on delivering a deal for Ireland.

"We know it's a very specific situation in Ireland, Ireland is a special case," he said.

"The Eurogroup will continue to take this into account.

"On the other hand, we agree we have to avoid any announcement which could be misunderstood in a way that everyone in the world is thinking the actual programme for Ireland does not work well, because it works well, and that is the most important thing," he added.

Mr Schaeuble said he was "100pc" confident Ireland would not need a second bailout and could exit the programme by the end of next year.

"I am totally confident that Ireland is on track," he said.

Mr Schaeuble declined to get into the negotiations on the promissory note, saying this was a matter for the European Central Bank.

He also repeated his demand for tighter budgetary controls on EU member states -- but said this could be done without the need for changes to EU treaties, which could result in another referendum.

He wants the European Commissioner for monetary affairs to have the powers to reject national budgets and keep European Parliament lawmakers from non-euro member states from blocking decisions that only affect the euro region.

He compared his proposals to the powers held by the European Commissioner for Competition, who can intervene in member states and block mergers of companies.

Mr Schaeuble had a meeting with just Mr Noonan and Public Spending Minister Brendan Howlin for 40 minutes, before being joined by officials from their departments for another 30 minutes.

The meeting was held at Farmleigh House because of the Dublin City Marathon taking place on Merrion Square, adjacent to Government Buildings and the Department of Finance.

Meanwhile, the country got a second boost from bond investor Michael Hasenstab, whose €6.1bn bet on an Irish recovery including lending billions to the Government via the bond market has made headlines around the world this year.

Yesterday, he told investors in the Franklin Templeton mutual fund he helps manage that Ireland had provided an example of how it was possible to tackle debt problems.

"The country, despite facing great adversity, continues to make progress on fiscal reform, and is increasingly getting recognition as a model for other countries," he said.

Irish Independent

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