Dan Neville (Limerick, Fine Gael)

I welcome the opportunity to contribute to the debate. As everyone has stated, it sticks in the craw to pay Anglo Irish Bank bondholders what we did, but the alternative is so stark that we have no choice given that we must restore balance to the public finances. The Government is slowly achieving that but it will not be achieved overnight. There will not be any instant solutions. We are engaged in a programme of reform which will restore the economy over a period, as Deputy Jim Daly has indicated.

Those who suggest we default or who are in the default mode should reflect on the outcome where default has occurred. Reference has been made to the Argentinean experience. Last year I looked closely at what happened in Argentina. The economists are correct; if we do something like that we will correct the economy in three to four years but one must not ignore the social ramifications and the pain people would have to endure. We would be at almost famine levels. It would be so irresponsible that under no circumstances could we even imagine the effect of such an approach as to default and not be able to bridge the €12 billion deficit, to which previous speakers referred.

The debate on default is ongoing. It might be an economic solution but for a start it would destroy our international reputation, on which we depend as an open economy. There would be serious implications for life opportunities and the standing of our citizens. Were we to default it is likely we would be thrown out of the eurozone and revert to the punt. Some people promote such an approach. The value of the Irish currency would collapse, thereby causing a currency crisis, as occurred in Argentina. A default would probably result in the value of savings being wiped out and make it impossible for people to get their hands on such savings. If this country defaults on its foreign debt and reintroduces the punt, most of the money in bank accounts would be in punts rather than euro and, as such, given the economic situation in the country, the value of the punt would plummet, the value of savings would decrease and the currency would depreciate. People with life savings in credit unions would find their value diminished. The cost of foreign goods and services would increase. There would be a devaluation in the value of the currency of between 50% and 70%, as occurred in Argentina. All imports, including 50% of supermarket purchases, would increase by 50% to 70%, as would all other imports and, as an open economy, that would have serious effects.

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