Regarding the payment to unsecured bondholders.
It is in fact the IBRC (former Anglo Irish Bank) that is responsible for repaying the €720 million or $1 billion bond tomorrow. It will be funded from the sale of $9.2 billion IBRC loan book in the US.
The Government is working with our European partners to find a more cost effective way of resolving IBRC over the long term, in particular the IBRC promissory notes.
The value of support present and future we receive from our European partners far outweighs any short term gain from imposing burden sharing on these bonds in the face of European opposition to such a move.
We are carefully nursing our economy out of this crisis, defaulting sounds like an attractive option. For Ireland to do this unilaterally, could cause an immediate funding crisis. We borrow €20 billion per year. If we cannot borrow €20 billion, we would need to have solutions to increase taxes immediately or cut social welfare, public sector pay and pensions by a third or add further cuts to health and education.
This is the stark reality of not paying these bondholders. None of the above scenarios would be acceptable and nor should they be. If at some point we do actually ask for a hair cut from unsecured bondholders, it has to be in a way that does not damage our overall economic future.
We have made very significant progress in improving the IMF deal: we have introduced the Jobs Initiative, reversed the cut in the minimum wage, and reduced the interest cost of the EU and IMF loans by €10 billion over their lifetime. But there is still a long and difficult process ahead.
If you would like more information on the governments view of this, I would recommend that you listen back to Minister for Finance, Michael Noonan’s very frank interview on Ireland AM this morning via the RTE website