Belfast Telegraph

Debt deal defers cash repayments

Ireland has struck a deal to ease its debt burden by deferring a 3.1 billion euro cash repayment for the former Anglo-Irish Bank.

An agreement has been secured to swap the IOU payment, known as a promissory note and due on March 31, in favour of a long-term Government bond.

Finance Minister Michael Noonan said the long-running negotiations with Europe were successful but urged caution.

"We all want to arrive at a successful conclusion that is in the interests of Ireland and the EU," he said.

About 30 billion euro was owed to Europe over the next 10 years in promissory notes - a type of State IOU or Government promise to pay debts.

Earlier this week Central Bank governor Patrick Honohan said a plan to spread out cash repayments, which also included some debts from Irish Nationwide, over a longer timeframe was now likely. Mr Noonan announced plans to defer the second instalment.

Anglo, rebranded the Irish Bank Resolution Corporation (IBRC), announced losses of 873 million euro for last year compared to 17.7 billion euro in 2010.

Mr Noonan said the settlement removes the need for the Government to dip into its 85 billion euro bailout fund and pay cash.

"There is a significant cash flow benefit to the Exchequer in 2012 and our long-term debt sustainability is enhanced," he said.

The move will knock 90 million euro off general Government deficit for this year and it will also give Ireland greater flexibility in plans to go back to the markets, the minister added.

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