Michael McGrath (Cork South Central, Fianna Fail)
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Question 22: To ask the Minister for Finance if he will explain his reasoning for not seeking to negotiate a voluntary write down of Ireland's sovereign and or bank debt in the context of the negotiations which have been taking place in recent days to resolve the Eurozone debt crisis; and if he will make a statement on the matter. [31914/11]

Michael Noonan (Limerick City, Fine Gael)
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There is no question of the Government seeking to restructure sovereign debt. The impact of such an action would be highly detrimental to our chances of returning to sovereign debt markets. Such an action would probably cause great damage to our reputation and sacrifice the credibility we have built up through implementing policies that will assist our economy in returning to growth. It would be unwise to jeopardise those hard won gains. In that regard, it is important to recognise that Ireland is in a totally different situation to Greece. The Greek debt to GDP ratio is projected by the IMF to rise to 186 per cent of GDP by end-2013. The equivalent number for Ireland, published in my Department's latest Stability Programme Update (SPU) in April, is 118 per cent.

In addition, the Greek economy is still in the midst of a severe recession. By contrast, Ireland is emerging from recession. April's SPU forecast that real GDP would grow by 0.8 per cent this year and strengthen next year and beyond. In Ireland's case, economic growth will help to bring about a return to debt sustainability. In Greece, the economy is shrinking and this is compounding the problem of an unsustainable debt burden.

A further critical difference between the two economies relates to the importance of international trade. In Greece, exports amount to the equivalent of just 20 per cent of GDP. This means that export growth cannot provide a significant offset to the contractionary effects of fiscal austerity. In Ireland, by contrast, exports amount to the equivalent of over 100 per cent of GDP which means that the growth of exports can provide a powerful offset to the negative effect of budgetary consolidation on economic activity.

I have stated on many occasions that all of the sovereign debt owed by the Government will be repaid. We are determined to work together with our European colleagues to find a common, shared approach to the issue of the sovereign debt crisis.

There is no reason to apply a different reasoning to the senior debt of Ireland's going-concern banks. This will be repaid in full. The Deputy will be aware that the Government has insisted on a strong recapitalisation of the banks and that the Government's policy remains that all creditors of these banks be repaid in full. This policy is already bearing fruit. Deposits are recovering and the Irish banks have already successfully tapped into wholesale term funding markets since July at a time when many of their European counterparts are experiencing very difficult funding environments.

However, as the Deputy will be aware the Government has considered burden sharing with senior bondholders in both Anglo and INBS in consultation with our EU partners. We have said that we will not act on this without the agreement of the ECB. This agreement has, as yet, not been forthcoming.