TAOISEACH Enda Kenny has confirmed a deal with the European Central Bank (ECB) to ease the EURO28 billion (£24bn) debt burden from the nationalisation of Anglo Irish Bank.
Expensive IOUs written to fund the collapsed rogue lender will be replaced with long-term bonds running on average for 34 years and saving the country billions, Mr Kenny said.
“Today’s outcome is a historic step on the road to economic recovery,” he told the Irish Parliament.
The arrangement, signed off by ECB chiefs at their meeting in Frankfurt over the last 24 hours, will cancel a debt repayment instalment of EURO3.1bn (£2.7bn) due next month and every March for the next 10 years.
Ireland will pay an annual interest rate of three per cent under the new deal.
Mr Kenny said failure to secure a deal on the Anglo debt would have meant repayments totalling EURO48bn (£41.5bn) over the lifetime of promissory notes.
“Step by step, this Government is undoing the disastrous banking policies that brought this State to the brink of national bankruptcy,” he said.
“The agreement has reduced Ireland’s vulnerability from the huge debts taken on by Irish taxpayers as a result of the cost of rescuing failed private banks.
“Irish citizens can look forward once again with positive expectations.”
Earlier, ECB president Mario Draghi said members of the bank backed the proposal to reschedule debt.
“The governing council unanimously took note of the Irish operation,” he said.
The plan was signed off in conjunction with the Government passing emergency legislation to allow the liquidation of the rebranded Anglo, the Irish Bank Resolution Corporation (IBRC).
Project Red, as negotiations on the plan were known in government circles, was created in a bid to cut general government debt of EURO1bn (£854m) a year over the coming years and reduce the eight per cent-plus interest rates on the Anglo debt.
“Let there be no doubt, this is no silver bullet to end all our economic problems,” Mr Kenny said.
“After the catastrophic economic management of the past decade, there is still a long way to travel in our country’s journey back to prosperity and full employment.
“The damage done by these financial institutions will take many years to rectify.”