Deal offers chance – let's try to take it
A SHORT-term high-interest overdraft has been transferred into a longer-term and cheaper interest loan.
That in simple and brief terms is the outcome of the new arrangement between the Government and the European Central Bank on dealing with the horrific legacy of more than €30bn in Anglo Irish Bank debt.
It is true that this debt remains with us. It is equally true that the moral and legal basis for it falling upon Irish taxpayers remains questionable.
But the stark reality is that we have few if any other practical remedies in our current situation.
Harking back to old grievances will not help advance efforts to return to prosperity.
Those who choose to rail against our EU partners place far less emphasis upon the day-to-day support we get from those same partners and without which we could not function.
Those who insist that Ireland get concessions comparable to those afforded Greece do not often add that we do not want the huge level of problems which led to Greece getting such concessions.
A significant bank debt write-off for Ireland would have been welcomed. But in reality it was never going to happen.
This deal gives the Government an opportunity to manage and ultimately deal with the Anglo bank debt. It brings a psychological dividend in that it can banish the last vestiges of a renamed Anglo Irish Bank – surely the most infamous bank in Ireland's financial history.
The deal helps restore Ireland's reputation internationally. It may even advance the cause of stability in the eurozone to some degree. A success story, however small, is badly needed.
We can be reassured by the projected savings in the longer term. The Taoiseach told the Dail yesterday that over €20bn less would have to be borrowed over the coming decade.
But let us not get carried away – Ireland remains heavily in debt.
In many ways the arrangement brings new challenges to the Government. It is clear that the scope to reduce borrowing cannot be taken as a signal to deviate from efforts to restore economic stability – much less any temptation to splurge.
But the ordinary Irish citizen needs practical evidence of hope and economic revival. It is urgently required of this Government to provide some stimulus and even more urgently required of it to ensure that banks make credit available.
Last night Finance Minister Michael Noonan did hold out some hope of a smallish easing in austerity. He suggested that in total €1bn may have to be available to soften expected taxation changes and spending cuts between now and 2015.
Much will now depend on how creative the Government is in using the limited breathing space afforded to it by the ECB.
Overall, this is a very good outcome which represents a small but significant step on Ireland's long road to economic recovery.
Taoiseach, Enda Kenny, Finance Minister, Michael Noonan, Central Bank Governor Patrick Honohan, and dozens of government officials are entitled to some kudos.
The Taoiseach in particular had staked much of his political reputation on achieving this deal. Mr Kenny is entitled to reap some political dividend now as he would surely have suffered a blow to his prestige had this effort failed.
This deal on Anglo Irish Bank has taken a long time to broker. It is, everyone will hope, something which will be followed sooner rather than later by more workable remedies for Irish bank debt generally.
But these are ongoing battles for another day.
For now, we hope this new arrangement will give encouragement to everyone in the country to continue the sometimes difficult efforts required to restore solvency and independence to Ireland into the future.