Brian Lenihan Jnr (Dublin West, Fianna Fail)

The Deputy raises two broad questions. First, our commitments under the Stability and Growth Pact remain unchanged as a result of this, and the reclassification which has already taken place does not affect in any way our Stability and Growth Pact obligations.

Deputy Bruton went on to ask what impact this will have on the accounting treatment of the recapitalisation of Anglo Irish Bank and of Irish Nationwide announced by the Government in March. The matter is complex and far from clear at this stage. Further information is required in terms of the ongoing consultation with the EU about the restructuring of the bank. The further recapitalisation of Anglo Irish Bank announced on 30 March has to be considered separately from the 2009 recapitalisation. The 2010 recapitalisation should be seen in the context of a restructuring plan for the bank currently being negotiated with the European Commission. The recapitalisation of €8.3 billion by issuing a promissory note has been recorded as increasing Ireland's general Government debt by that full amount in 2010 and, pending the agreement of the restructuring plan, it is appropriate not to include it in the deficit measurement until the matter can be reviewed on foot of any decision made by the European Commission on the plan.

I should stress that regardless of the eventual treatment in the general Government balance statistics, the reality is that in terms of the Exchequer borrowing requirement these payments will be made over the coming years, beginning in 2011, and will be reflected in the year such payments are made. They will not affect our obligations under the Stability and Growth Pact or the volume of reductions that may be necessary in Government expenditure.

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