Ireland sees the end of its rescue closer, after reaching an agreement to ease its bank debt and the triad formed by the European Commission, the European Central Bank (ECB) and the IMF to certify the smooth running of its economic program .
It is a “historic” day, said the Irish Prime Minister, Enda Kenny , in an intervention before Parliament in which he explained the terms of the agreement sealed with the ECB, which will save the State, he said, “billions of euros “
Shortly before, the troika certified, after concluding its ninth quarterly review , that Dublin continues to comply with the conditions of the aid program granted in 2010 by the European Union (EU) and the International Monetary Fund, for 85,000 million euros.
The president of the ECB, Mario Draghi, did not want to offer details about this plan or even confirm its existence Kenny confirmed that, after months of intense negotiations, the ECB has agreed to restructure the pending debt of 28,000 million euros from Anglo Irish Bank, the bank whose collapse forced Dublin to ask for a bailout , and the financial institution Irish Nationwide.
According to the conservative leader, the agreement sealed in Frankfurt allows the restructuring of the loan of 31,000 million euros granted three years ago to save both entities, nationalized in 2009 and in the process of closing through the state company Irish Bank Resolution Corporation (IBRC) ).
The ECB granted those 31,000 million euros with the issuance of the so-called debt recognition documents (IOU, in its acronym in English), a note used by Dublin to recapitalize both entities, which forced him to pay each year, until 2013, an interest of 8%.
Next March 31, Ireland had to face one of those annual payments , which amounted to 3,100 million euros, which is why it had proposed to the ECB to exchange the notes with long-term government debt, with an average maturity of 34 years. .
The new agreement, explained Kenny today, allows to exchange these notes for long-term government bonds with an annual interest of around 3% , which will contribute, he said, to the state to “save billions of euros . “
From Frankfurt, the president of the ECB, Mario Draghi, did not want to offer details about this plan or even confirm its existence, but he assured that, “unanimously” the governing council of the entity has “taken note” of the “Irish operation “
Reticent to the swap
Until now, the ECB had been reluctant to exchange the promissory notes for government bonds because it could contravene regulations that prevent the community entity from directly financing the governments and it will be necessary to see if the agreement sets a precedent for other countries with problems of banking debt.
Draghi referred to the frantic activity carried out by the Irish Government since Wednesday, which led to the adoption in the national parliament of a new emergency law aimed at facilitating the final liquidation of the IBRC, which will now form part of NAMA, the Irish “bad bank” .
The restructuring plan will have a positive effect on the progress of the rescue to Ireland, whose “strength” has contributed to improve “substantially” its access to the financing markets, as well as the conditions of its sovereign and bank debt , according to the troika.
The inspectors said on Thursday that both sides have started talks to “prepare and support” the Dublin plans, which hopes to “successfully and durably” abandon its aid program at the end of 2013.
The GDP will grow
“Ireland continues its economic recovery and is expected to gradually gain momentum ,” the troika said, predicting that the Irish Gross Domestic Product (GDP) will grow this year “above” 1% and 2% in 2014.
The triad also highlighted that Dublin last year achieved “comfortably” with the public deficit target of 8.6% set in the rescue, since it closed 2012 with a deficit four tenths below the ceiling.
In this regard, the troika also approved the measures adopted by the Government since November to implement the adjustment plan foreseen for 2013, with which it expects to save 3,500 million euros and reach the public deficit target of 7.5% of the GDP established by the EU and the IMF.