Séamus Kirk (Louth, Fianna Fail)
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Question 17: To ask the Minister for Finance his views on the impact of the issuing of an Irish Government bond of €3.46 billion in lieu of the 31 March promissory note payment on the ability of Ireland to return to the debt markets in 2012; and if he will make a statement on the matter. [19279/12]

Michael Noonan (Limerick City, Fine Gael)
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There are significant advantages to the settlement of the March 2012 promissory note installment with the new Government bond including: · This payment was included in our debt repayment schedule for 2012 and this proposal removes the requirement for the exchequer to settle in cash, the €3.06 billion promissory note installment.

· There is a significant cash flow benefit to the Exchequer in 2012 and our long term debt sustainability is enhanced.

· This will have an approximate €90m impact on the general government deficit in 2012 which is small relative to the overall benefit of the removal of the requirement for the Exchequer to settle €3.06 billion in cash.

· The €3.06 billion of Programme funding that would otherwise have been used to make the promissory note payment should potentially allow greater flexibility around when and at what level Ireland returns to the capital markets. However, our thinking on the timing of that return to the markets remains unchanged as a result of this transaction.

· As noted by the Governor of the Central Bank in his appearance before the Finance and Public Expenditure and Reform Committee: "There is a very definitive gain in debt sustainability. The net effect of this transaction is to reduce the economic cost for the State as a whole of refinancing this payment."

While this development in relation to the end March payment 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 continuing banking sector which could also stem from the ongoing technical discussions.

It is for these reasons that we must look at the recent developments as what would be 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 refinance the long term Government bond issued in settlement of the March 31 payment. We all want to arrive at a successful conclusion that is in the interests of Ireland and the EU.