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Troika did not force government’s hand on Anglo bond payout

25 January, 2012

Speaking in the Dáil this evening on the handover of €1.25billion for an unguaranteed Anglo bond, Sinn Féin TD Peadar Tóibín tackled each of the government’s arguments for paying the sum of money.

Deputy Tóibín said it is not true to say that the Troika has forced the government’s hand on the issue and that the handover is not part of the Memorandum of Understanding.

Deputy Tóibín said:

“I would like to clear up a number of untruths the government has spun today in order to deflect their handing over of 1.25 billion euros of Irish money to private bond holders. The government has stated that the troika have forced it. This is not true.

“Paying the unsecured, unguaranteed bondholders forms no part of the Memorandum of Understanding. The only reference to bondholders in the Memorandum of Understanding is that the government seeks to discount subordinated (junior) bondholders.

“The Troika will not ‘pull’ the money we borrow under the programme if we do not pay these bondholders. It would not be breaking the agreement we entered into with them.

“The government then shifts its position and says well it’s not in the memorandum of understanding but the EU and ECB told us to pay bondholders, that the ECB has provided massive liquidity to Irish banks and we can’t upset them.

“Besides the fact that Anglo Irish is a dead bank and commercial debt should be dealt with in a commercial fashion the simple truth remains, Ireland is unable to pay these bonds.

“Also the Greek Government is currently negotiating a discount of up to 70% with bondholders in the private sector, and the ECB has not withdrawn liquidity. We are fulfilling programme requirements over and above what the Greeks are doing, we cannot be treated any differently.

“Pulling liquidity from Irish banks would precipitate financial armageddon across the European banking sector. It is the link between Irish and European banks which saw the liquidity provided in the first place.

“The government then say we don’t want to be Greece, we don’t want default written over our heads.

“When Minister Noonan entered into negotiations with the ECB this week on a reduction in some of our banking debt (Anglo Promissory Notes), the sovereign bond market rates fell to under 6%.

“We were punished by the markets not because we threatened default and our inability to pay. We were punished by the markets because it was fantasy to say we would pay everything when we clearly cannot.

“The government then claims that we the opposition want us to not pay these bonds, but they won’t tell us how they’d make the immediate deficit balance that would be required if we didn’t pay the bonds and the Troika took away our loans.

“But as I have said bondholders are not in Memorandum of Understanding from which our line of credit comes. Our objective is to remove the Troika by getting back to the markets.

“Our policies, which we would implement after negotiating a new Memorandum of Understanding would bring about deficit reduction quicker than the government and in a more sustainable way as set out in our pre-budget submission. Our policies would grow the economy as opposed to the government’s policy of strangling the economy.

“The government would have us sign up to an anti-investment austerity treaty in Europe which will mean austerity budgets in perpetuity.

“Sinn Féin wants to see our budgets decided democratically and on the basis of our economic cycle not the election cycle of France and Germany.” ENDS

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