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Written Answers - EU-IMF Programme

Thursday, 19 January 2012

Dáil Éireann Debate
Vol. 752 No. 2

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 80.  Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath  asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan  when the reduction in the interest rate being charged to Ireland from funds paid out of the EFSF and EFSM took effect; and if he will provide a complete schedule of the current interest rates being charged to Ireland on all sources of funding under the EU-IMF programme of assistance, including bilateral loans. [3220/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Euro Area Heads of State or Government (HOSG) agreed on 21 July 2011 to reduce the cost of the European Financial Stability Facility (EFSF) to lending rates equivalent to those of the Balance of Payments facility close to, without going below, the EFSF funding cost. In addition, further amendments to the EFSF framework have removed the interest rate margin on EFSF funds and were incorporated into a new legal agreement on the 27th of October in which the interest rate margin is now defined as zero. The agreement incorporates a guarantee commitment fee of 0.1% per annum and a service fee to cover the cost of operations of the EFSF. The NTMA has estimated that the overall net reduction in Ireland’s EFSF interest rate margin and other changes will be in the range of 2.7% to 2.8%. It should be noted that the EFSF’s cost of funds depends on the interest rate it pays for its market issuance when raising funds for programme countries.

In October, the EU Council of Ministers approved an EU Commission proposal to eliminate the margin of 2.925% on the EFSM facility. This change was incorporated into an amendment to the existing legal agreement on 28th of October and the margin is now defined as zero. This will apply to EFSM borrowings back to the date upon which they were issued. The actual cost of funding depends on the prevailing market rates at the time of each drawdown.

In relation to the schedule of the current interest rate being charged to Ireland on all forms of funding under the EU/IMF Programme of financial support, the following table supplied by the NTMA, provides the information for all amounts drawn down up to 16 January 2012

Drawdown Date Maturity Date Interest Rate Currency Principal
EFSF 01/02/2011 18/07/2016 2.75% EUR 4,193,835,977
EFSF 14/11/2011 04/02/2022 3.60% EUR 3,000,000,000
EFSF 15/12/2011 15/03/2012 0.32% EUR 985,950,000
EFSF 12/01/2012 04/02/2015 1.73% EUR 1,270,000,000
Total EFSF 9,449,785,977
EFSM 12/01/2011 04/12/2015 2.50% EUR 5,000,000,000.00
EFSM 24/03/2011 04/04/2018 3.25% EUR 3,400,000,000.00
EFSM 31/05/2011 04/06/2021 3.50% EUR 3,000,000,000.00
EFSM 29/09/2011 04/09/2026 3.00% EUR 2,000,000,000.00
EFSM 06/10/2011 04/10/2018 2.38% EUR 500,000,000.00
EFSM 16/01/2012 04/04/2042 3.75% EUR 1,500,000,000
Total EFSM 15,400,000,000.00
IMF 18/01/2011 18/01/2021 Floating SDR + Surcharges XDR 5,012,425,200.00
IMF 18/05/2011 18/05/2021 Floating SDR + Surcharges XDR 1,410,000,000.00
IMF 07/09/2011 07/09/2021 Floating SDR + Surcharges XDR 1,319,000,000.00
IMF 16/12/2011 16/12/2021 Floating SDR + Surcharges XDR 3,309,000,000.00
Total IMF1 11,050,425,200.00
UK Bilateral 14/10/2011 15/04/2019 4.72% GBP 403,370,000.00
Total UK Bilateral 403,370,000.00

Note 1: The interest rate on IMF loans is variable. It is composed of a weekly setting of the IMF SDR interest rate and surcharges which are volume and time dependent. As of 19 January 2012 the SDR interest rate accruing on Ireland’s IMF loans is 0.10% and the surcharges are 2.32% making a total of 2.42%.

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