Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

A number of things need to be said about the deal on the promissory note and its replacement with long-term Government bonds. There will be grave disappointment that the total amount of debt remains unchanged. Given how policy in Europe is evolving, it will not be long before a system is put in place whereby the cost of further banking crises will be met by a central eurozone fund, in other words, a system whereby all member states in the eurozone will contribute and which provides for burden sharing. This is the essence of the banking union, which is coming down the track. This needs to be acknowledged.

In converting the promissory note to Government bonds, we are now fully accepting that the new regime will not be retrospectively applied to Ireland. That is the bottom line. The deal that has been done confirms that, in essence, the entire stock of Anglo-related debt will be borne by this State alone, a reality to which recognition must be given. Given the European Central Bank's insistence that this remains Irish debt and needs to be fully borne by the Irish State, the question that then arises is how best to pay it. This is essentially what the Government has been seeking to renegotiate over the past number of months. There is no doubt the replacement of the promissory note with long-term Government bonds with maturities of between 25 and 40 years eases the burden of repayments. There is no question about that. I believe independent analysis will support that assertion.

To properly assess the impact of this deal, we need the Government to publish the full details of it and to publish an updated economic and fiscal outlook. The last occasion on which this was done was in respect of the budget last December. The updated economic outlook needs to show, for example, the revised general government debt, the projected deficit, the Exchequer balance and the impact of this deal on the budgetary adjustments. We need those details and we need them as quickly as possible. The Tánaiste might say in his response how long the Irish Central Bank will be allowed to hold these long-term Government bonds, which is the key issue at the heart of all of this. As long as the bonds are held by the Irish Central Bank, the true interest rate to the State is reduced because part of it will be circular. However, the European Central Bank will want its money back as quickly as possible and will not, I am sure, allow the Irish Central Bank to hold those bonds indefinitely. The Tánaiste might also comment on the interest rate issue. I assume it is a floating interest rate linked to the ECB re-financing rate and is, in essence, a variable interest rate.

The net effect of the deal will be a €1 billion saving on the budget side. It is €1 billion that can be realised in one year on a one-off basis. How does the Government propose to use this money? Will it use the €1 billion as a cushion to achieve its overall budgetary targets or will it seek to renegotiate with the troika a reduction in the budget adjustment planned for next year, which is currently €3.1 billion? That is possibly the most fundamental question we would like to have answered.

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