Belfast Telegraph

Saturday 30 August 2014

Promissory cash 'must ease budget'

Joan Burton says money freed up from the promissory note deal should be used to slash tax hikes and spending cuts

Social Protection Minister Joan Burton has repeated her claims that money freed from the promissory note deal should be used to soften the next budget.

Despite reports that debt masters in the Troika would oppose such a move, the Labour TD said Ireland should benefit from the gains of the deal.

Ms Burton said: "The critical thing is that the promissory note deal gives Ireland a small bit of extra leeway in relation to helping people to get back to work. And I would like to see the budget framed in the context of helping people get back to work and we have that little bit of extra leeway through the promissory note deal."

The debt deal to cut the cost of Ireland's toxic Anglo Irish Bank rescue is expected to save the state one billion euro a year.

Project Red, as it was secretly known in Dublin before it was announced earlier this month, will see 28 billion euro worth of costly IOUs from the nationalisation of Anglo swapped for long-term sovereign bonds.

Ms Burton had suggested money freed up from the deal should be used to slash tax hikes and spending cuts planned for Budget 2014. She said the Troika - made up of the European Commission, European Central Bank (ECB) and International Monetary Fund - was aware of the financial difficulties normal people have been forced to endure in eurozone countries through austerity and unemployment.

"The people in the Troika, all of them, whether it's from the ECB, or the commission, or from the IMF, are very concerned about that," she said.

Ms Burton was speaking before ECB president Mario Draghi attended a European Parliament committee to be grilled on the Anglo debt deal and whether it remains valid from the bank's point of view. This follows claims from European banking chiefs that the deal may be in breach of EU rules.

Ms Burton said she did not believe there were any legal uncertainties surrounding the promissory note swap. However, she understands that different people have expressed their own views.

She said: "We understand the particular point of view, but we have a point of view, as do most countries across the EU in relation to the crisis, and the existential crisis for the EU of so many people in so many countries being unemployed. I think it's generally recognised that the deal for Ireland is helpful for Ireland, it's positive and it's promising."

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