Tommy Broughan (Dublin North East, Independent)
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56. To ask the Minister for Finance the negotiations that have taken place or are taking place around restructuring Ireland's debt repayments, especially the large portion resulting from the blanket bank guarantee as identified by the Comptroller and Auditor General; and if he will make a statement on the matter. [36710/15]

Michael Noonan (Limerick City, Fine Gael)
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The Comptroller and Auditor General's (C&AG) Report on the Account of the Public Services 2014 (2014 Report) includes as chapter 3 a report on the Cost of Banking Stabilisation Measures as at end-2014. 

The C&AG found that, by the end of 2014, the estimated net cost to the State of measures taken to stabilise the banking system was just under €60 billion. Net investments (after disposals) of just over €61 billion and estimated debt servicing costs associated with the investments of almost €9 billion were offset by net income totalling just over €10 billion from the investments, liability guarantee schemes and associated dividends from the Central Bank.  Included in this cost are capital injections that were made under Ministerial direction by the NPRF Commission amounting to €20.7 billion which were funded from the NPRF's own resources and did not require borrowing, lowering the overall impact on general government debt. The overall level of General Government Debt at the end of 2014 is stated to be some €203 billion in chapter 2 of the 2014 Report.

In chapter 3, the C&AG notes that interest on the national debt, together with interest payments on promissory notes, for the period 2009 to 2014 was around €31.7 billion. The €8.7 billion estimated cost of servicing the debt associated with investments to end-2014 (including the imputed debt service costs of the NPRF investments) represents almost 28% of this.

As the Deputy will be aware, in late 2010, Ireland entered an EU - IMF programme of financial support which provided €67.5 billion of loans over the years 2011 to 2013, subject to conditionality being met. Of this amount, €22.5 billion was provided by the IMF, €22.5 billion was provided by the EFSM, €17.7 billion was provided by the EFSF with the remaining €4.8 billion coming from three bilateral lenders - the UK, Sweden and Denmark. The initial terms for these loans were a 7½ year average maturity (7.3 years for the IMF loan) at an average interest rate estimated in 2010 to be 5.8%.

The Government has achieved significant improvements in the terms of our EU-IMF programme loans since they were initially agreed in 2010.

In 2011, we reached agreement to reduce the cost of our loans from the EFSF, the EFSM and the bilateral lenders. It is estimated that these interest rate reductions are worth around 9 billion euro over the initially envisaged 7 ½ year term.

These interest rate reductions, and more recently the early repayment of a large portion - of some 18.3 billion euro - of our IMF loans, mean that we have negotiated real cash savings of over 10 billion euro.

Also in 2011, the average maturity of our EFSM and the EFSF loans was extended to 12.5 and 15 years respectively, and a further extension of up to 7 years was agreed in 2013. This has smoothed our redemption profile, improving long-term debt sustainability, and has had a positive effect on the cost of Exchequer borrowing.

The extension of maturities and the subsequent replacement of the Promissory Notes issued to the Irish Bank Resolution Corporation (IBRC) with a series of longer term Government bonds reduce the State's borrowing requirement by over 40 billion euro over the next decade, thus significantly improving the viability of the State's finances.

On 8 December 2014, the ESM Board of Governors approved the creation of the Direct Recapitalisation Instrument (DRI) in accordance with Article 19 of the ESM Treaty. The operational framework for the DRI, approved on the same date, includes a specific provision in relation to the retroactive application of the instrument. The guideline states that the potential application of the instrument for this purpose should be decided on a case-by-case basis and by mutual agreement. This provided an option of alleviating the burden of some of our bank related debt.  

However, unlike back in 2012, the ESM is no longer the only option open to us to recover the money provided to recapitalise our banks. Investors are now willing to support Irish banks again and the market value of our investments has improved accordingly. My overall objective in relation to the State's investment in the banks is to maximise the return to the Irish taxpayer.