The Central Bank Governor has been welcomed to the Committee by Alex White TD.

Honohan: ahead of the March 2012 payment the Central Bank has been working on mechanism on the question of the promissory note in order to reach a compromise that is agreeable to Ireland.

Michael McGrath: are we being ambitious enough in what we are seeking to achieve – particularly as the ECB has said it can be more flexible?

McGrath asks what interest rate would apply the proposed government bond, and whether the Governor yet has a sense where these discussions with the ECB taking Ireland.

Read Honohan’s full opening statement here>

Honohan: a long term bond is a” major step forward”, as if puts of the need to refinance payments and lowers net cost.

Honohan says that the whole issue needs to be structured in a way that “brings us to a safer place”. Says that discussions were“very much” going in a positive direction.

Honohan on interest rate: We need to look at the underlying economic flows – whether considering  a bond or promissory note.

Honohan asked if he has looked into deferring the interest on the setting on the Irish government bond.

Honohan: The promissory note probably an “overly complicated device” for ensuring the solvency of Anglo.

The promissory note is a “a manifestation of the guarantee” – the Government was faced with the decision to pay all of Anglo’s debts immediately or “put in a note”, says Honohan.

Honohan predicts that there will be several more months of discussions because of the objectives of ‘different players involved’.

Honohan: Any changes reached will not impact this year’s Budgetary profile.

Pearse Doherty TD asks whether there will be any changes to Budgetary profile either this year or next year.

Doherty also asks whether the capital amount can be reduced.

Doherty asks the Governor how this proposal could increase the country’s debt sustainability, as it has been suggested.

Honohan: In terms of the proposal on this payment – it is important to remember that the value of debt of debt to GDP ratio is only one indicator of sustainability. So, by lengthening the debt,debt sustainability will be improved.

Interestingly, Bloomberg reports that the bond that Ireland would be use in order to repay the first €3.06bn would currently costs us almost 7 per cent in annual interest.

Doherty: What is there to prevent IBRC trading the sovereign bond on the markets?

Honohan:  That would be a matter for the Minister for Finance… but I can’t envisage it as a problem.

Kevin Humphreys TD: Can you confirm or deny that the interest on the long term bond is 6.8 per cent?

Honohan: The coupon is 5.4 per cent, but the market yield will depend on the day of the relevant transaction.

Humphreys: Has the Central Bank taken advice on the Constitutional challenge?

Honohan says Humphreys’ questions are all ones he is restricted to answer in public session. Says he will address them privately.

Stephen Donnelly TD asks Honohan what is the projected cash shortfall for this year – ie how much additional money IBRC will need – and about the sustainability of the debt.

Honohan says that the objective of the plan is to eliminate “the cash need” of IBRC by postponing it.

Honohan in response to Donnelly: “The debt position, of course, is calculated… I share your concern that we might get into a situation where we become too optimistic and complacent.”

He adds that making arrangements which prolong the maturity of the promissory note will put us in “a safe position.”

Meeting has gone into private session

That’s all folks – thanks for joining us!