Thursday 23 March 2017

State may see sharp rise in interest rate for EU loans

Brendan Keenan

Brendan Keenan

IRELAND could have to pay as much as 6.5pc on the next tranche of EU money, based on current market rates.

As the terms of the EU/IMF bailout became the central issue in the General Election, one analyst said that while the cost of EU money was increasing, new proposals from the IMF could knock 1pc off the cost of its loans.

"I pointed out to an Oireachtas joint committee that EU money could go above 6pc," said Professor Karl Whelan of University College Dublin.

"The quoted 5.8pc average cost of the first EU loans was based on market rates last November, but rates have risen significantly since then."

There could be better news on the €25bn coming from the IMF. Proposals to double the amounts that member countries contribute to the IMF could mean lower rates on future drawdowns over the next four years.

"This could take a year. But if it goes through, it could knock around one percentage point off the IMF rate, bringing it below 5pc," Dr Whelan said.

Irish Independent

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