Irish

Saturday 2 August 2014

Revealed: how troika got €220m fees from taxpayer

Published 22/08/2013|04:00

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The IMF's Ajai Chopra, right, acccompanied by by Istvan Szekely of the European Commission, centre, and Klaus Masuch, left the ECB' s chief economist and other troika officials arriving at the Department of Finance

THE taxpayer has paid more than €220m in fees to the EU and IMF – on top of massive interest payments for our multibillion-euro bailout.

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The fees – which are for services including administration – are charged when the State draws down a loan, or tranche, under the €67bn programme.

This is on top of the €1.4bn interest payments made in the last year alone on the bailout.

Between 2010 and the end of last year, the State paid about €224m worth of fees – roughly half the amount of money that Social Protection Minister Joan Burton is under pressure to cut from her department in October's Budget.

The State's debt-management agency, the National Treasury Management Agency (NTMA), said the fees related principally to administration and service fees on loans drawn down under the EU/IMF programme.

Last year, €67.3m was racked up in fees under the funding programme, down from €113.8m in 2011.

The reduction reflects the fact that less money was drawn down last year than in the previous year.

In 2010 – the year the bailout was agreed between the Fianna Fail/Green Party coalition and the troika of lenders – the figure was €41.2m.

Fianna Fail's Finance spokesman Michael McGrath said the EU/IMF lenders should not be collecting the fees, given that Ireland was "by far and away the best prospect of a eurozone country emerging successfully from a troika bailout programme".

"The troika is now insisting that the Government ploughs ahead with further tax increases and spending cuts of €3.1bn in October's Budget, with scant regard for the impact on our citizens," said Mr McGrath.

"Given that over 90pc of the troika funding has now been drawn down, a suspension of these fees would yield minimal savings for the Exchequer at this stage.

"However, in recognition of the sacrifices made by the Irish people over the last number of years to get our public finances back on track, it would be a very welcome gesture if the troika were to repay the €224m collected in the fees to the Irish State."

The bailout was agreed in November 2010, with €17.5bn contributed from the State and €67.5bn in external support.

This included €22.5bn from the IMF, €45bn from two European bailout pots and bilateral loans from the UK, Sweden and Denmark.

At the time, borrowing costs were prohibitively high at about 8pc, rising to a peak of 14pc in July 2011.

When the bailout was agreed, there was a 0.5pc up-front handling fee on all drawdowns from the IMF, as well as a 0.5pc up-front service fee involving one of the European bailout pots, the European Financial Stability Facility (EFSF), and syndication fees involving the other, the European Financial Stability Mechanism (EFSM).

The fees requirement was noted as far back as the NTMA's 2010 annual report and the agency has detailed how much was spent each year through its annual reports.

Throughout the life of the bailout, the Government has secured some concessions on the interest rate paid.

Ciaran Lynch, chair of the Oireachtas Finance Committee, said the priority of the Government had been to bring an end to the bailout and put an end to such costs.

The Labour TD added: "The expectation is that the troika will be exiting Ireland at the end of this year or the beginning of next year, put on the runway and sent out of this country, with the expectation that these type of costs and other measures associated with the arrangement will have finally concluded."

By Colm Kelpie

Irish Independent

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