Tuesday 21 November 2017

Taoiseach Enda Kenny confirms no easy budget after Brussels deal

Ed Carty

THE BANK debt deal secured by European Union leaders will not ease the burden of cuts and tax hikes in the budget, Taoiseach Enda Kenny confirmed.

Backing Finance Minister Michael Noonan's assessment, the Taoiseach said the knock-on effect of severing the link between bank losses and states will not be felt until future years.

"For this particular budget 2013, this decision will not make any appreciable difference," he said.

"Not for this budget certainly, but for the future, the negotiations that will be entered into will be important.

"People say to me 'what figure are you talking about?' I don't have a bottom line here. I do have a top line, and that is the maximum benefit for the people of our country."

Mr Kenny also confirmed that the Government was aiming for the end of the year to finalise agreement with the European Union on substantial reductions in the €60bn bank debts currently lumped into sovereign debt.

It has already been suggested that the deal needs to be agreed by the end of October.

The first round of talks begins among EU finance ministers in Brussels next Monday.

The Taoiseach said the deal struck in the early hours of last Friday should be seen as a diplomatic win and not a financial win.

"It's not a case of anybody looking for credit here. I gave great credit to the Irish people for their decision on the referendum. That was credit in the bank to use a pun, for use at an opportune time," he said.

Mr Kenny also asked all members of the Dail to bring suggestions forward as to how Ireland should benefit from the splitting of bank debt from sovereign debt.

Meanwhile, the National Treasury Management Agency (NTMA) said it will make a limited return to the money markets on Thursday.

Chief executive John Corrigan said the hour-long auction follows an intensive engagement with investors at home and overseas during the past 18 months.

"(It) marks an important first step in our phased re-entry to the capital markets," he said.

The Taoiseach said the move was an indication of the country "dipping its toe in the water".

Testing the waters, the agency will offer €500m of treasury bills to mature over three months in its first sale since September 2010.

Three months later the country was signing off on an €85bn bailout from the International Monetary Fund, Europe and its own pension reserves.

The move follows the ground-breaking deal struck in Brussels last week that is expected to give Ireland breathing space on its €64bn in bank debt and has resulted in lower borrowing rates.

The latest review of the bailout has got under way in Dublin with officials from the IMF, European Commission and European Central Bank in town.

The bank debt agreement by the leaders of the 17 eurozone nations came after German chancellor Angela Merkel appeared finally to relent in the face of concerted pressure from Spanish prime minister Mariano Rajoy and Italy's Mario Monti. The two leaders made it clear they would block further progress at the summit unless they received assistance to curb their soaring borrowing costs.

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