John Perry (Sligo-North Leitrim, Fine Gael)

I thank Deputy Michael McGrath for raising this important issue. I am taking this on behalf of the Minister for Finance, Deputy Noonan, who is on important Government business as we speak.

The Government is committed to reviewing the arrangements that were put in place to capitalise the Irish Bank Resolution Corporation, IBRC, by the previous Government. The purpose of this review is to determine whether there is a way to reduce the overall cost to the State. Part of the capitalisation of IBRC was provided using promissory notes as consideration. The troika has agreed to engage in this process to produce a common paper which will consider all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest rate, etc.

While the development in relation to the end-March promissory note payment, whereby the payment due was settled with a Government bond maturing in 2031, is a positive development, we must keep our eye on the greater benefits which would derive from the re-engineering of the promissory note and also the potential improvements for the banking sector which could also stem from the ongoing technical discussions. It should be borne in mind also that recent concerns in the eurozone underpin the fact our problems are part of a wider European dilemma and the need for solutions to address the Irish situation as part of an overall eurozone-global solution.

It is for these reasons we must look at the recent developments in relation to the promissory note repayment as an initial step to facilitate a project where, if we are successful, it will be in the medium term rather than immediately. These discussions will continue and the Government is focused on developing an alternative solution to the promissory note arrangement in IBRC. The ongoing discussions may also explore options to re-finance the long-term Government bond issued in settlement of the 31 March payment. We all want to arrive at a successful conclusion that is in the interests of Ireland and the EU.

We support proposals to allow European funds to directly recapitalise banks and will ensure any proposals advanced at EU level will be in the best interest of the Irish taxpayer. It is too early to make an assessment as to what mechanism will be arrived at ultimately in the potential recapitalisation of the Spanish banking sector or to speculate as to how such mechanisms could, if implemented, be utilised retrospectively to the benefit of the Irish position. It should be borne in mind that the recent concerns in the eurozone underpin the fact the solutions to address the Spanish situation, as with the Irish situation, should be seen as part of an overall eurozone-global solution. We will continue to review the proposals that emerge in relation to Spanish bank recapitalisation to ascertain whether any of the proposed measures would have favourable applicability if implemented in Ireland, including whether they could potentially alleviate a proportion of the €62.8 billion cost to the State of the recapitalisation of the Irish banks.

While our debt levels are sustainable and we are committed to repaying our debts, the development of an alternative funding arrangement, which would, for example, extend the term of the loan or reduce the costs, would aid our return to the markets in 2013. This Government has constantly sought to advance proposals that are in Ireland's interest, and our successes can be seen in the interest rate reduction that has saved the State almost €10 billion over the lifetime of the EU loans and the settlement of the 2012 promissory note payment by way of a long-term Government bond.

The positive result in last week's referendum has been recognised across Europe as good news for the European project, strengthening the eurozone's course to a more stable future. The referendum result also improves the Government's position in any negotiations that might occur in the further restructuring of the Irish banks, costs incurred to date in the recapitalisation of the institutions or the funding of the assets held by the banks.

The Government will continue to press Ireland's case for a better long-term solution to our debt problems. We will continue to monitor developments in the eurozone closely and to participate actively in discussions leading to a sustainable solution to problems facing individual countries and the eurozone. We recognise clearly that the eventual solution must have regard for Ireland's best interests and the interests of the eurozone. The House will appreciate it is too early in the process to predict what the eventual outcome might be and, as indicated, it is not envisaged the eventual solution will be arrived at in the short term. Given the decision-making process in the European Union, it is much more likely a sustainable solution will emerge in the medium term.

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