DUBLIN (Reuters) - Ireland and the European Central bank disagree on the best way to cut the country’s legacy bank debt but a deal may be secured by December, Ireland’s finance minister was quoted as saying on Wednesday.
Euro zone leaders agreed at a summit in June to look at improving Ireland’s bank rescue, a commitment that has pushed Irish bond yields down and allowed Dublin to raise long-term debt for the first time since its EU/IMF bailout two years ago.
Ireland wants the terms tied to 31 billion euros ($40 billion) of IOUs pumped into two failed banks to be eased and Europe’s rescue funds to take over its stakes in other lenders.
But Noonan said there was disagreement with the ECB on how to replace promissory notes used to finance the now defunct Anglo Irish Bank.
“It’s an open secret that the Irish position and the ECB position aren’t totally aligned, but technical work continues,” Noonan told Irish state broadcaster RTE during a trip to Paris.
The International Monetary Fund said on Monday that IOUs should be replaced by long-term government securities rather than European rescue funds, saying that a bond would avoid adding to debts that markets may consider senior.
Noonan said on Tuesday that the ECB disagreed with the IMF view, but that the Irish government had not made a decision on which it would prefer.
Noonan told RTE it was not clear if a decision would be made by the end of October, a timeline suggested EU Economic Affairs Commissioner Olli Rehn, and that the government would like a deal by December.
“It might be in the Irish interest if the timeline were extended somewhat” to see what deal Spain secures on bailout funds for its banks, Noonan was quoted as saying.
Reporting by Conor Humphries; Editing by Ruth Pitchford