IMF and EU will benefit to tune of €14bn on our bailout repayments
Published 14/07/2011 | 05:00
Irish taxpayers will pay €14bn in profit to the IMF-EU.
Giving new details yesterday, Finance Minister Michael Noonan revealed that €9bn would go to the EU but a further profit of almost €5bn on the bailout loans to Ireland would go to the IMF -- bringing the total profit for lending €85bn up to nearly €14bn.
Ahead of the completion of the latest review of the bailout deal today, the Irish Congress of Trade Unions' general secretary David Begg stirred controversy by claiming that the IMF-EU team agreed with him that the plan wasn't working.
Mr Begg said the team told him the bailout wasn't producing the necessary results.
It has also emerged that the State's €10bn contribution to the IMF package will not be drawn down as quickly as originally planned. This means the National Pension Reserve Fund, which manages the money, can invest the funds on the international markets.
It is understood the State wants to invest the money in short-dated government bonds, although what market is unclear. One of the reasons the State's contribution is not needed yet, is because the amount needed for bank capitalisation, €24bn, came in lower than originally expected.
The position of Ireland's rescue will be spelled out today by Ajai Chopra, of the IMF's European division. He will compliment Ireland on its progress, but will criticise Europe's response to the crisis here.
"They are still on the same flightpath that they have always been on," he said.
Mr Begg said the bailout team agreed the programme of cuts and austerity wasn't working because the amount Ireland was being quoted to borrow was continuing to grow.
"All of the evidence of the thing is it's not working and it's not working because the deflation is preventing growth for getting a hold on the economy," he said.
In a written Dail reply to Sinn Fein finance spokesman Pearse Doherty, the Government said the total amount of interest and surcharges due on the bailout loans, if everything went according to plan, was €4.6bn and the last repayment was due in 2023.
Mr Noonan says that, unlike the EU loans, "it is possible to pay the IMF borrowing back early without penalty, reducing the cost of borrowing".
The IMF-EU team will sign off on the Government's handling of the bailout today.
Last week, Mr Noonan revealed the €9bn due to the EU. He said the interest on the European financial stabilisation mechanism loans of €22.5bn would be €4.9bn.
The interest on the European financial stability facility loans of €17.7bn would be €3.3bn.
On the bilateral loans from Britain, Denmark and Sweden, Mr Noonan said only the British facility has been agreed and it provided for a margin of €650m.
All told, the total margin would be in the order of €9bn.