–Adds Comments On Fiscal Policy

DUBLIN (MNI) – Ireland’s bailout program is on track and it must
not undermine the confidence it has gained in financial markets by the
planned restructuring of E30 billion in promissory notes, European
Central Bank Executive Board Member Joerg Asmussen said Thursday.

In a speech here, Asmussen said that any deviation from the
commitments Ireland made when it issued the promissory notes to rescue
its banking system at the height of the financial crisis must be
“considered very carefully indeed.”

“The perceptions that have built up around Ireland’s successes in
the program should not be jeopardized,” Asmussen said. “Therefore, the
ECB remains of the opinion that Ireland should honor its commitments
stemming from the promissory notes, as foreseen.”

Asmussen said that any plan to restructure the promissory notes
must meet the criteria that it improves the chances of the Irish
government and Irish banks to return to market funding and that it
reduces banks’ reliance on Eurosystem liquidity.

If Ireland puts forth a plan that meets these criteria, “the
ECB is ready to work with the Irish authorities on such proposals,” he
assured.

Asmussen said that the ECB’s liquidity support for the Irish banking
system has been extraordinary and that it must be reduced over time.

Ireland started to restructure the promissory notes program in
March when it replaced a E3.1 billion cash payment due with a long-term
bond. Finance Minister Michael Noonan has said he hopes to refinance the
balance of the promissory notes over the course of this year.

Asmussen said he was confident the government could reach its
deficit target this year of 8.6% of GDP even with the projected weak
growth rates for the domestic economy of 0.5% in 2012 and 0.2% in 2013.

The government must continue to consolidate its finances and
implement more structural reforms “so that there will be no lingering
doubts about the sustainability of government debt,” he said.

Ireland has “a long way to go” before its economy normalizes, he
cautioned.

–Paris newsroom, 33142715540; jduffy@marketnews.com

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