Saturday 20 January 2018

Now Coalition wants to fast-track deal on legacy banking debt

Fionnan Sheahan Political Editor

THE Government is hoping for a speeding-up of the pace in securing a deal on the legacy banking debt following German Chancellor Angela Merkel's re-election.

The Coalition views a debt deal as a component in a successful exit from the bailout.

Government figures believed there would be little progress in the pursuit of an agreement on legacy debt before the German election.

The process was regarded as stalled while Ms Merkel was in campaign mode as she would be unwilling to concede ground for fear of alienating voters.

She is just short of taking an overall majority and winning a historic third term.

Last night, a senior government source said the Coalition hopes the outcome will lead to a "renewed focus on the issue".

The Government secured a deal earlier this 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.

It is also seeking a deal this year, arguing that Ireland needs to reduce the national debt, which is set to peak at €200bn.

SCEPTICAL

A deal would allow it to borrow funds on the markets at affordable rates and exit the bailout at the end of this year.

But if it gets out without a deal on the bank debt, sceptical EU countries may say there is no need for one.

The Government wants to see the European Stability Mechanism being able to help recapitalise banks that ran into trouble in the past.

No agreement is possible until Europe creates a single banking supervisor.

Irish Independent

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