Annual saving in the wake of European deal could be as much as €1.2bn -- expert
Published 23/07/2011 | 05:00
THE EU's new deal to solve the debt crisis will save Ireland at least €700m a year in bailout repayments -- but the final figure could be as much as €1.2bn.
After securing a 2pc interest rate reduction on EU loans, the Government now has to move on getting a similar cut on the loans from Britain, Sweden and Denmark and the IMF.
Before the new deal, interest rate repayments were estimated to be worth €14bn.
The amount of interest to be repaid will be calculated by the National Treasury Management Agency (NTMA), the state body that manages the national debt and borrowing.
The Department of Finance said it will take some time to calculate the exact value of the interest rate reduction.
The €85bn bailout package consists of:
•€22.5bn from the IMF.
•€22.5bn from the European Financial Stability Mechanism (EFSM).
•€22.5bn from the European Financial Stability Fund (EFSF) and bilateral loans from the UK, Sweden and Denmark l The rest comes from our own funds.
The final saving could be as much as €1.2bn a year, according to UCD economist Karl Whelan.
"An annual saving of €800m is being widely cited but I have my doubts if the correct amount has actually been calculated.
"My guess is that the final savings could be a bit larger, perhaps as much as €1.2bn annually," he said.