Politics to trump central bankers
PARIS With major central bank policy on hold for now, politics will take centre stage in the coming week as the U.S. presidential election enters a new phase with the first televised debate.
DUBLIN Ireland is not expected to secure a wider deal on refinancing 27 billion euros (22.41 billion pounds) of IOUs by mid-May, the country's deputy finance minister said on Wednesday.
Dublin has been campaigning for months to soften the terms of its bank bailout, and is seeking agreement on this with the troika of lenders comprising the European Union, European Central Bank and International Monetary Fund.
"There is no expectation at this stage that the issue will be resolved by the May euro zone group meeting," junior finance minister Brian Hayes told state broadcaster RTE.
"People shouldn't read too much into the fact that the meeting is taking place in the May period," he added. Euro zone finance ministers meet on May 14.
Dublin is principally concentrating on replacing 30 billion euros of high-interest IOUs given mainly to the former Anglo Irish Bank with another instrument that would lengthen their maturity and cut their interest rate.
Ireland struck a deal on Thursday to avoid immediate payment of 3.1 billion euros due on the IOUs, settling the bill by issuing a 13-year bond instead of paying cash.
Dublin now wants a broader deal on refinancing the remaining 27 billion euros of the IOUs - or promissory notes. Such an agreement would ease its funding pain and boost its chances of returning to bond markets next year.
"We've a number of fences to jump before this deal is actually done ... there is an expectation now that deal will come sooner rather than later. But I think there is a lot of work to be done on this," said Hayes.
Dublin will engage with the international troika of lenders when they return to Ireland in 2 weeks time, then it must gain support from the remaining 16 euro zone countries, said the minister.
"That will involve a huge amount of political engagement to get the issue over the line," he added.
The ECB would favour replacing the promissory notes for loans backed by the European Financial Stability Facility (EFSF), a central bank source has told Reuters.
(Reporting by Lorraine Turner; editing by Stephen Nisbet)
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