Michael McGrath (Cork South Central, Fianna Fail)

At the outset I thank the Ceann Comhairle for selecting this important matter. I also thank the Minister for Finance for coming into the Chamber to reply.

It is fair to say the Minister caught us all unawares last night with his statement in the House, giving us a progress report on the Government's efforts to renegotiate the planned repayment of €3.1 billion at the end of this month in respect of the IBRC promissory note. I hope he takes the opportunity today to clarify the status of that matter right now. I am aware that it was considered by the governing council of the ECB at its meeting this morning. No statement was issued at the conclusion of that meeting and I understand that technical talks are to resume again. Perhaps the Minister might update the House on where the matter stands today, following that particular governing council meeting. Can the Minister say whether he is confident at this stage that a deal can be concluded in advance of the repayment date at the end of the month?

The outline of the deal that he described last night is certainly promising. It is a sign of a breakthrough and it is the first indication of some level of flexibility on the part of the European Central Bank on restructuring this promissory note. Its real value is if it is an interim step towards an overall settlement which will ultimately result in a reduction of the debt burden facing the Irish people in respect of legacy bank debt.

Can the Minister clarify some details of what he outlined to the House last night? How would the process work if such a deal is finalised? What he suggested appeared to relate solely to the repayment due at the end of March 2012. Can he confirm if that proposal represents a template for the overall deal he is hoping to achieve? In other words, will the repayment due at the end of March 2013 fall due for repayment under a Government bond in 2026, the 2014 payment in 2027 and so on? Or is the deal that he outlined last night merely an interim measure, pending the overall deal that he is trying to negotiate? Can he take us through the mechanics of how that would work? The bond he is issuing to IBRC under this proposal will presumably attract an interest rate. Will that be comparable to the interest rate currently being quoted on the secondary markets, or will it be an interest rate on a par with what Ireland is currently being charged as a programme country? I assume the cash outflows under such an arrangement would be that the full €47 billion would still be paid, but also that there would be an interest payment in respect of the Government bonds he is proposing to issue.

Most people watching will be interested to know the impact this deal, if successful, will have on future budgets, on the general Government deficit and on general Government debt levels for Ireland. The interest payments which were due from next year onwards were to be factored into the general Government deficit. If this deal is secured, how much easier does it make the achievement of the fiscal targets in 2013 and beyond? I would be grateful if the Minister could address those points.

See this speech in context