Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State, Deputy Brian Hayes, for taking the debate. The Minister of State may know that I have been raising this issue for some time through parliamentary questions and questions to the NTMA and the Governor of the Central Bank. It is a very important issue.

In 2010 and 2011, the European Central Bank, ECB, and national central banks purchased almost €20 billion of Irish sovereign bonds in the secondary market through the secured market programme. At that time, the bonds were trading well below par. When Ireland redeems and pays out on the bonds as they fall due, the ECB will make substantial profits on the capital portion and further profits on the interest or coupon we pay out each year. Currently, profits are shared out proportionately among eurozone national central banks according to their share of the ECB capital base or on the basis of GDP and population. We should seek the return of these profits, which I estimate at between €3 billion and €5 billion. Those figures have not been contradicted by the Central Bank or the NTMA. Of that €3 billion, Germany would get the greatest share, equal to 19% of the total, or €600 million; France would get 14%, or €420 million; and Ireland would make a profit on its own bonds equivalent to 1% of the total, or €30 million.

Greece has been given a deal worth more than €7 billion and we should seek the same. Just last week, the ECB released the figures on its SMP holdings showing that €14.2 billion is currently held. The figure excludes the holdings of other national and central banks on our bonds. I ask the Minister of State to look at this as part of the strategic and tactical negotiations on reducing our national debt. The Minister should start to negotiate this reduction.

Dominic Hannigan (Meath East, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Ceann Comhairle for selecting this important topic. In November, the Minister for Finance, Deputy Michael Noonan, and other eurozone finance Ministers agreed a deal for Greece that has not yet been made available to any other country. The special deal is that the interest and capital earned on the ECB purchase of Greek bonds will be returned to Greece. This represents €500 million for the Greek economy in 2013 alone, and the money will continue to be paid for the next five years. I understand that if a similar deal was extended to Ireland, it would represent approximately €500 million per year. Over five years, this would be about €2.5 billion. If we could renegotiate a similar deal for Ireland, we would be in a better position to address the hole in our budget. Over the next two years, we would have an additional €1 billion to play with in the Exchequer. I stress the need to go to Europe to make the case that we want something similar to the deal the Greek Government got. I ask the Minister of State to ensure that he and the Minister for Finance, Deputy Michael Noonan, make a case for Ireland to get a similar deal from the ECB.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Deputies for raising the matter and note their interest over many months in pursuing this issue with the Minister for Finance, Deputy Michael Noonan.

What the Government is seeking to achieve with its European partners to underpin Ireland's exit from the programme is complex and is not simply a matter of requesting the same policy tools as have applied in the case of Greece. We should recall that serious budgetary and economic problems led to Greece's requiring urgent financial assistance in early 2010 and additional measures since. Despite the assistance provided in 2010 and the further assistance provided later, Greece's problems remained and its financial position continued to give cause for significant concern. Thus, in late 2012 a range of additional measures were agreed at EU level which were designed to help Greece to meet its commitments under its programme of financial assistance. It is worth noting that the measures taken were unique and particular to the very grave situation that obtained in Greece. It is also important to note that these actions were taken with significant additional conditionality, which I can refer to later and which we would not wish to be applied in our case.

The measures agreed in respect of Greece included a debt buyback of bonds held by private investors - what was called private-sector involvement; a reduction of 100 basis points in the interest rate margin on the Greek loan facility, bringing it to 50 basis points; a cancellation of the guarantee commitment fee on EFSF loans; an extension of the maximum maturities of the loan to Greece by 15 years to 30 years, which is a measure we are working on following our communiqué to ECOFIN and the eurozone in January 2013; the deferral of interest payments on EFSF loans for ten years; and an agreement that member states will pass on to Greece's segregated account an amount equivalent to the income on the securities market programme portfolio accruing to their national central banks from budget year 2013. This last measure is a transfer from the relevant member states, not the ECB.

On the question of the amount of money involved, while a figure for the profits made by the European Central Bank, ECB, on its holding of Irish Government bonds is not available, it published information on its holdings of bonds under its securities market programme on Thursday, 21 February 2013. This showed the ECB held €14.2 billion nominal value of Irish bonds on 31 December 2012, with an average remaining maturity of 4.6 years.

The package of measures for Greece agreed late last year by eurozone Finance Ministers was designed to help put the Greek economy on the road to recovery. The package was agreed in the context of the statement by euro area Heads of Government that the scale of the Greek problem is so large that it requires special attention. It is important to note again that the concessions that have been agreed are specific to Greece and are accompanied by significant additional conditionality.

It must be acknowledged Ireland is in a very different situation to Greece. Our programme is working. We have completed over 190 agreed targets and have surpassed many including our annual deficit targets. Growth has returned to the economy and I particularly welcome yesterday's figures showing positive employment growth. Furthermore, as a country exiting a programme, our situation cannot be seen as comparable to Greece. We are, however, examining the Greek package to see if aspects of it offer any possible benefit to Ireland, particularly for our exit.

We have had positive news recently. The elimination of the promissory notes and Irish Bank Resolution Corporation, IBRC, the sale of the Bank of Ireland CoCos, contingent convertible capital notes, the recent sale of Irish Life, and just this week, the announcement of the end of the bank guarantee are all significant milestones on the way to our recovery. We still, however, have very important and necessary decisions to take, as evidenced by the recent agreement on public sector pay. Ireland is a country very different from Greece.

We must also recall the benefits we have already received, notably assistance in the form of reduction of interest rates and extended maturities. In addition, the Heads of Government statement of June last year on breaking the link between banks and sovereigns made explicit reference to supporting Ireland's well-performing adjustment programme. It is important to remember Ireland is exiting a programme. We should have regard to what we need to assist that exit rather than focus solely on measures provided for a country in very different circumstances.

Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context | Oireachtas source

I compliment the Ministers, Deputies Noonan and Brian Hayes, for the work they have previously done in this regard. I did point out that the ECB did publish its holdings of Irish Government bonds of €14.2 billion in the securities market programme. What is not clear is what other member states' Central Banks hold. I maintain it is approximately €20 billion.

I accept we are not Greece. We certainly do not get the weather it gets. I am not referring to a write-down or an interest holiday but to the profits on Irish debt of which each eurozone country will receive a share unless we are given a similar package to that of Greece. There is an opening to negotiate this. We need to build on the deal Greece got recently. It would make significant savings of €3 billion, the equivalent of what would be raised if we sold off some State agencies. Such savings would make a substantial difference to our debt profile and help us speedily recover economically.

Dominic Hannigan (Meath East, Labour)
Link to this: Individually | In context | Oireachtas source

I note the Minister for Finance has joined us in the Chamber. He once said one of the few good things to come out of Greece was feta cheese. I believe this deal the Greeks got with the ECB was also something good that came out of Greece. Notwithstanding the fact we are in a different programme, did a deal on the promissory notes, closed down IBRC and have had other successes over the past few days, this deal requires further action on our part. I expect the Minister to make the case to Brussels for Ireland to get the same deal the Greeks got.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The adjustment this year for our budget is €3.5 billion. The equivalent adjustment in Greece is about €9 billion, despite the write-down it has already obtained. This is Greece's third run at this. On the other arrangements put in place by the Eurogroup, there was significant private and public sector involvement. We have always said we will examine all the options and continue to negotiate the package that best suits Ireland's needs. Some of the issues extended to Greece, particularly on the extension of maturities on the EFSF, European financial stability facility, and ESM, European Stability Mechanism, moneys, are being examined by the European Commission to see if they might fit into Ireland's circumstances.

We are, however, in a different position to Greece. It is accepted internationally that Greece will be in the accident and emergency ward for a long time. We are not like that. We will be out of this programme because of the decisions the Deputies and other colleagues have supported this Government in taking over the past two years. It is important that we continue to look at the range of options that are there. The tools that apply to Greece may not automatically apply to Ireland. We are always open to looking if they can be fitted to the particular circumstances in the Irish case. This is an evolving negotiation with the end of it when the troika leaves and we are back on our feet. We are confident we can get there but we will continue to look at all of the options available. It is not honest, however, to claim the Irish debt profile, economic experience and banking position is in any way comparable to the situation that applies in Greece.