Video: Yes vote paves way for EU deal on bank debt
TAOISEACH Enda Kenny plans to look for an EU deal on the country's bank debt after yesterday's resounding referendum Yes vote.
Strengthened by the 60-40 result in favour of the fiscal treaty, he will ask EU chiefs for a deal to reduce the burden on taxpayers from the multibillion-euro rescue of the banks.
A bank debt deal could make future Budgets easier and speed up our exit from the IMF/EU rescue fund -- and a return to borrowing on the markets.
The deal the Government wants includes:
- Reducing the amount of annual bank debt repayments.
- Guaranteeing cash flow for banks on a longer-term basis.
Mr Kenny said he raised the issue with German Chancellor Angela Merkel when he rang her to confirm that the treaty had been passed.
Ms Merkel said that Ireland deserved "appreciation and respect" for staying the course on the additional cuts and taxes imposed under the terms of the bailout.
She said: “The result shows that the Irish population continues to support the demanding consolidation and reform agenda of the Irish Government.
This commands – particularly because of the ensuing cuts and hardships – special appreciation and respect.” The EU fiscal treaty was backed by a clear-cut majority, with 60.3pc voting Yes and 39.7pc voting No.
The turnout was disappointing at just over 50pc – the fourth-lowest turnout of the nine EU referendums in the past 40 years.
Only five out of the 43 constituencies across the country rejected the treaty – three in Dublin: Dublin North-West, Dublin South-Central and Dublin South-West – along with Donegal North-East and Donegal South-West.
In the wake of the referendum result, Tanaiste Eamon Gilmore said the vote was a necessary step on Ireland's road to recovery, but stressed the importance of a long-term deal on Irish bank debt.
The referendum result was welcomed by EU leaders but the European economic climate deteriorated further as the focus remains on Spain.
Mr Kenny said the developing situation in Europe's banking sector needs a comprehensive solution and “Ireland's banking debt must form part of that solution”. The Government is understood to want to spread out the annual €3bn repayment on the €28bn State-funded bailout of Anglo Irish Bank.
This would make it easier to exit the IMF/EU bailout as the international markets would look upon the move favourably. The coalition is also seeking that loans provided by the European Central Bank to keep cash flowing through the Irish banking system be extended.
At an EU leaders’ summit at the end of the month, the use of the new EU bailout fund by banks will be discussed. The Government is hoping if this step has to be taken to assist Spain, it will also be available to Ireland.
European stock markets sank to six-month lows with weakerthan- expected US jobs numbers adding to a flurry of gloomy economic data and making investors even more reluctant to hold stocks over the long weekend. In a move that is sure to be watched by the Taoiseach, Germany softened its drive for cuts in Spain, agreeing to give it more time to cut its deficit while it battles a deepening bank crisis, billions of euro in capital flight and recession.
Ireland's bailout programme runs to 2013 when the deficit is supposed to be 7.5pc of GDP, falling to 3pc by 2015 under an agreement with the EU. Any extension of this would mean annual budgets would be easier. Until now, Germany has taken a hard line with states missing agreed deficit targets, worried that accepting failure would weaken the commitment to consolidate and hit market confidence.
Mr Kenny confirmed he raised the issue of bank debt in phone calls yesterday with Ms Merkel, French President Francois Hollande, Spanish Prime Minister Mariano Rajoy, European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.
Mr Kenny, who always said that the banking debt issue was separate from the referendum, now said the State was in a better position to negotiate it.