Written answers

Thursday, 2 June 2016

Department of Finance

Government Deficit

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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161. To ask the Minister for Finance the impact on the general government deficit of the dividend of €275 million due to be received from the Irish Bank Resolution Corporation's special liquidator; if this impacts on the fiscal space for 2016; if possible future dividends will impact on the general government deficit in 2017 and beyond; and if he will make a statement on the matter. [14240/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Special Liquidators of IBRC announced last Friday (via a third progress update report which is available on the Department of Finance website) that they hope to be in a position to make an interim distribution by 31 December 2016 of 25% of all admitted claims made by unsecured creditors. While neither the Department of Finance nor the Special Liquidators announced the sum that the State is due to receive from this interim dividend, there were various reports stating the sum to be in the region of €275m. This is based on 25% of a €1.1bn claim which the State has made.

Given the creditor adjudication process is still ongoing, it is not clear as to what month this interim dividend will be paid.

The Special Liquidators of IBRC also announced last Friday that their expectation is that the eventual unsecured creditor dividend will be in the range of 75% - 100% of all eligible claims. While it is too early to confirm whether there will be further interim dividends or when the final dividend will be paid, the Special Liquidators have advised me that this eventual dividend range is subject to change depending on future events which are outside their control. The ultimate level of dividend paid to each creditor cannot be known until such time as all loan assets are sold, the total level of adjudicated creditors is finalised and the other contingent creditor claims which may crystallise, including those from litigation, are known.

Any amounts paid into the Exchequer would be recorded as a financial transaction in the General Government accounts under Eurostat rules. This means that such proceeds would not count as General Government Revenue and, therefore, have no beneficial impact on Ireland's General Government Deficit. Furthermore, it will not have any effect on the calculation of available fiscal space.  

However, while not improving the deficit, cash proceeds would result in a reduced Exchequer borrowing requirement which ultimately results in lower debt. A lower debt level is not only beneficial in terms of the fiscal sustainability but would also lead to reduced interest payments in future years.

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