A BREAKTHROUGH in the negotiations relating to the payment of a €3.1 billion bank debt due at the end of this month was announced in the Dáil last night by Minister for Finance Michael Noonan.

He said the Government was negotiating with the EU authorities, and principally with the ECB, on the basis that the promissory note could be settled by the delivery of a long-term Irish government bond.

“The details of the arrangement have still to be worked out,” he added.

The Minister said that in recent months the Government had been involved in technical discussions on reducing the burden of debt associated with the recapitalisation of the banks.

In particular, the focus had been on the promissory note arrangement put in place to fund the Irish Bank Resolution Corporation, formerly Anglo Irish Bank and Irish Nationwide.

Mr Noonan was replying to a Sinn Féin Private Members’ motion seeking the removal of the “blackmail clause” relating to the European fiscal compact treaty.

Party finance spokesman Pearse Doherty said the Government was saying that if a majority of people voted No in the referendum, Ireland would be denied European Stability Mechanism (ESM) funding in the future.

“This is simply not true,” he added. “The ESM has not yet been ratified by this State. The Government continues to have a veto.”

The Government, said Mr Doherty, had yet to set a date for the referendum and already the scaremongering had begun.

Mr Noonan said Ireland was in receipt of substantial support from the EU mechanisms under the EU-IMF programme of financial support. “This provides funding at rates well below those which would be available if we had to fund ourselves in the financial markets,’’ he added.