Michael Noonan (Limerick City, Fine Gael)

The promissory notes were issued in various tranches with different interest rates. There were four tranches for Anglo Irish Bank and two for the Irish Nationwide Building Society. The total interest cost to the State for all tranches of the Anglo Irish Bank and Irish Nationwide Building Society promissory notes is approximately €17 billion, with annual repayments of €3.1 billion per annum. These annual repayments reduce over time as the various tranches of the promissory notes are repaid. The final payment on the promissory notes of approximately €100 million will be made on 31 March 2031. The total cost of the promissory notes, including the principal amount and interest, will be in the region of €47 billion over the life of the notes. The following is a detailed aggregated schedule of capital repayments and interest on the promissory notes.

The Deputy should be aware that the funds which become available to the State as a result of borrowing undertaken by the Exchequer are not generally assigned to one particular area of expenditure, rather they are available, with the funds sourced from revenues such as tax revenue, non-tax revenue and capital receipts, to fund overall expenditure. Accordingly, there was no one tranche of borrowing undertaken solely for the purpose of funding the promissory note payments to Anglo Irish Bank and the Irish Nationwide Building Society. The drawdowns of funds so far under the joint EU-IMF programme of financial support have been used for a range of purposes, including, of course, the general running of the day-to-day operations of the State. It is difficult, therefore, to isolate precisely the exact cost of the interest payments on the borrowing undertaken to fund the promissory note payments. However, for illustrative purposes, on the basis of the original 5.8% blended average interest rate which applied to borrowing under the programme, the interest costs on borrowing of €3.06 billion would be just under €180 million per annum. In the light of the recently agreed reduction in interest rates on funding available under the joint EU-IMF programme of financial support, however, the estimated interest cost on such borrowing reduces to approximately €115 million per annum.

Additional Information not given on the floor of the House.

While the State has budgeted to meet both the interest and cash requirements, I am eager to have the promissory notes examined to see if they can be re-engineered in a better way for the State such as, for example, by lengthening their maturity and reducing the interest rate on them. This re-engineering would have to be completed in a manner which did not impact on the capital position of Anglo Irish Bank and may or may not be feasible.

I had the opportunity to meet President Trichet on the margins of the ECOFIN meeting in Poland on Saturday, 17 September. He was very complimentary of the progress being made by Ireland and noted the narrowing of bond spreads that had taken place, which he would not wish to see put at risk. I mentioned to him and in a separate meeting to Commissioner Rehn the situation in relation to the promissory notes. I proposed that our technical experts get together to examine the technical aspects and the implications of any potential changes. They were agreeable to this on the basis that there was clearly no commitment on their part up front. We are proceeding on that basis.

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