EFSF gives Ireland extra seven years to pay off €20bn in loans
IRELAND has been granted seven extra years to pay off more than €20bn worth of loans as agreed in April.
The loans, worth €17.5bn, were made by the European Financial Stability Facility (EFSF), the temporary rescue fund set up by members of the eurozone. They make up about a fifth of Ireland's total bailout package of €85bn.
The loans will now be paid back over 19.5 years rather than the original 12.5 years.
This reduces the amount of money that Ireland will need to borrow by €20bn. Coupled with the promissory note deal, it will give the State an extra €40bn in cash flow over the next decade.
In 2015 alone, it should reduce Ireland's borrowing needs from €10.6bn to €4.4bn.
Finance Minister Michael Noonan said yesterday that this "will further strengthen our ability to make a full and sustainable return to the markets".
The EU Economic and Financial Affairs Council said the aim of the extension was to help Ireland regain access to loans from the open market and successfully exit the bailout programme.
It said the bailout programme was broadly on track "despite challenging macroeconomic circumstances" and that Ireland had been "successful in addressing imbalances".
Portugal was also granted a seven-year extension on its EFSF loans.
"The extension will smooth the debt redemption profile of Ireland and Portugal and lower their refinancing needs in the post-programme period," said EFSF chief executive Klaus Regling.
"It will enhance the confidence of market participants and protect Ireland and Portugal from refinancing risks."