The Irish Government took a victory lap Thursday over its resolution of a €31 billion debt overhang dating back to 2010. In an all-night session of the Irish Parliament, lawmakers finally liquidated the Irish Bank Resolution Corporation, the state-owned entity that had taken on the assets of Anglo Irish Bank and was responsible for repayment of that debt to the Irish Central Bank.

Under the terms of the liquidation, the government will exchange the promissory note it provided to Anglo Irish for long-term, interest-only government...