Early bailout loan repayment rules should be examined
Published 22/07/2014 | 02:30
ANY expectation that Europe will weigh-in and give Ireland a deal on its crippling bank debt has long faded.
The Government may be publicly hanging on to the commitment from EU leaders to break the link between bank and sovereign debt, but European leaders don't seem keen to back-date that for Ireland.
However, that lack of willingness in the face of faithful adherence by the Irish to tough austerity measures places the Government in a strong negotiating position to have the rules on early repayment of our bailout loans relaxed.
Finance Minister Michael Noonan has pointed out that if the IMF loans were repaid, the less onerous European loans would also fall due. And vice versa. But if Ireland was allowed to take advantage of the record low borrowing costs enjoyed on the international markets, it could potentially make savings of hundreds of millions of euro in interest charges.
Ireland has to pay an estimated 4.99pc on the €22.5bn IMF portion of the €67.5bn bailout. The average weighted maturity of the IMF loan is about seven years.
Ireland can currently raise seven-year money on the markets at the much more comfortable rate of 1.2pc. Analysts, including Cantor Fitzgerald Ireland, have long argued the benefit of securing such a deal. Mr Noonan recently said discussions on early repayment haven't taken place with the troika. The figures suggest it would be worthwhile.