Saturday 22 July 2017

Government sticks to its guns on 5.8pc fee

Fionnan Sheahan

Fionnan Sheahan

The exact interest rate being charged to Ireland for the €67.5bn international rescue fund created some confusion last night.

The Government says the correct figure is 5.8pc.

It is being charged a different rate of interest by the various different sources providing the funding -- the EU and IMF.

Taoiseach Brian Cowen said that if drawn down in total today, the "combined annual average interest rate" would be 5.8pc a year.

"The rate will vary according to the timing of the drawdown and market conditions," he said.

Mr Cowen did not elaborate on the individual interest rates.

However, at a briefing in Washington, the IMF said the interest rate on its €22.5bn chunk of the package was 3.1pc.

IMF European department deputy director Ajai Chopra confirmed this figure in Dublin.

"Yes, that's a fact," he said.

European Central Bank official Klaus Masuch said the 5.8pc figure related to the EU portion of €45bn and "does not include the IMF contribution".

The revelations lead to confusion about how the overall average could be 5.8pc, when the EU rate is 5.8pc and the IMF rate is 3.1pc.

But the Government is sticking to its guns on the 5.8pc average. The Department of Finance said the rate calculation was a "highly technical question" and the figures were calculated by the National Treasury Management Agency (NTMA).

A department spokesperson said to calculate the rate, the NTMA put each of the loans into the same currency of euro, the same time period of seven-and-a-half years and at fixed rates.

The difference is the IMF lends using a different means of calculation to everybody else.

Irish Independent

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