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Noonan casts doubt over Lenihan's recapitalisation story

The Fine Gael spokesman says he believes Brian Lenihan didn’t receive the approval of the EU or IMF before his announcement.

Image: PA

Updated, 16:25

FINE GAEL finance spokesman Michael Noonan has said he believes Brian Lenihan may not have received total approval from the IMF, European Central Bank and European Commission before announcing the delay to the recapitalisation of Ireland’s banks.

However, at a press conference this afternoon, Lenihan said he believed he had an “understanding” with the EU and IMF to delay the recapitalisation.

Finance minister Lenihan yesterday said he was delaying the proposed recapitalisation of the banks – which was required under the terms of Ireland’s bailout deal, in order to bring them in line with European capital targets – until after the election, given Ireland’s political situation.

Announcing the delay, Lenihan said he had received full backing for the delay from each of the three parties funding Ireland’s €67.5bn deal – but this afternoon Noonan said he believed that may not have been true.

“[I am] led to believe this is not the case,” Noonan said. “In fact, this agreement goes against the terms of the current agreement with the IMF-EU.”

Noonan called on Lenihan to “come clean with the Irish people” and indicate publicly when he had been given the approval to delay the deal – which has left the incoming government, in which Noonan is likely to figure, facing a major headache over whether to follow up on the €7bn injection – or whether to refuse it and risk the collapse of the bailout agreement.

“Was it on the authority of the Taoiseach Brian Cowen, or the party leader Micheál Martin, that he made the decision?” Noonan asked, adding that the timing of the announcement – made just after the IMF had published a review of Ireland’s post-bailout progress – “speaks for itself”.

“For two years now, Brian Lenihan has claimed he has a mandate for all his disastrous measures for the banks. Suddenly during an election campaign, he claims that mandate has run out,” the Limerick East candidate said.

Speaking at a party press conference later, Lenihan said he had “an understanding” with all parties and rejected any suggestions the international bodies were opposed to the deal.

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The minister added that if both Noonan and Joan Burton – either of whom could succeed him as Minister for Finance – wrote to him to say they supported the immediate capital injection, he would proceed with it as previously planned.

Fine Gael was “campaigning against policies they have no intention of reversing”, and said the party’s proposed hike in VAT in the next budget could prove “lethal”.

“The balance to be struck is to provide a tax system that is fair, that does not disincentivise work and that pay for the provision of our public services,” the minister – running in Dublin West – said. ”Our proposals provide such a tax system.”

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Gavan Reilly

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