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'We have to get a deal on our bank debt' - Tánaiste

Following the passing of the Fiscal Compact treaty, Eamon Gilmore said that Ireland now needed to get a deal to lessen the burden on the Irish taxpayer.

Eamon Gilmore
Eamon Gilmore
Image: Sasko Lazarov/Photocall Ireland

TÁNAISTE EAMON GILMORE has reiterated the government’s commitment to getting a deal on Ireland’s banking debt following the passing of the Fiscal Compact treaty in a referendum last week.

Gilmore said discussions were taking place at both an official and technical level with a view to getting a deal that would lessen the amount of money which the Irish taxpayer is liable for when it comes to the banking debt.

He told RTÉ Radio that there were a number of options being discussed including the idea of using the European Stability Mechanism (ESM) bailout fund as a means of shifting bank debt off the government books.

“We have to get a deal on our bank debt,” Gilmore told the This Week programme. “And from the time that the present government was formed 15 months ago we set out on a strategy to negotiate that deal. We’ve have had some success.”

Gilmore pointed to the lowering of Ireland’s interest rate it pays on its bailout money and the restructuring of the promissory note repayments as signs of government’s progress.

The Tánaiste said that discussions were taking place “at an official and at an expert level” with a view to lessening the bank debt and said that the European Stability Mechanism (ESM) is one option being looked at.

Discussions at a EU leaders’ summit later this month are expected to focus on using the ESM bailout fund to recapitalise Spains’ troubled banking system as well as shift a portion of Ireland’s government debt – brought about by the bank guarantee – to the ESM.

Though the state-owned Irish banks would still be liable for the debt – which totals around €64 billion – it would no longer be viewed as government debt, a development that would increase Ireland’s chance of returning to normal lending markets next year.

“We’ve been talking about this for sometime. Obviously the result of the referendum greatly strengthens our hands. The decision the Irish people took on Thursday was a very positive decision to help stabilise the euro,” Gilmore said.

The Tánaiste said that the upcoming EU leaders’  summit on 28 and 29 June would be the setting for discussions on a number of growth measures that the government promised would come in addition to the Fiscal Compact treaty.

He said the use of project bonds, unused structural funds and funding from the European Investment Bank by widening its lending remit would be some of a number of measures that could boost growth in the eurozone and would be discussed by leaders.

He said that discussions over the issue of Ireland’s bank debt and cutting a deal on it were not contingent on the outcome of discussions over so-called eurobonds which proposes pooling eurozone debt, a measure Germany opposes but other nations such as France are in favour of.

Read: Gerry Adams: Yes vote in referendum ‘the result of fear of the people’

Read: Eurobonds will come sooner or later, reckons Mario Monti

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Hugh O'Connell

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