Ireland can repay loans without conditions, IMF said.
THE International Monetary Fund (IMF) has said Ireland can repay its bailout loans early free of charge and without any conditionality.
Finance Minister Michael Noonan has said taxpayers could save up to €375m per year if the state was able to pay-off a share of the IMF portion of the €67.5bn bailout.
But repaying the IMF portion of the loan early would automatically trigger the repayment of the less onerous European share also, thereby wiping out any potential benefit.
A proposed deal would see Ireland raise cash on the markets to repay €15bn of the more than €22bn that the Government owes to the IMF.
It comes after the international rescue fund hiked interest rates to almost 5pc, compared to little more than 2pc on the markets.
Mr Noonan said last month that lenders have yet to be asked to waive their repayment rights. The idea will be pursued at ministerial level in September, he said.
Fianna Fail’s finance spokesman Michael McGrath, who received a letter from the IMF assuring him that Ireland could repay its loans earlier, said today that every effort must be made by the Government to achieve this.
"The government now needs to follow up on this with the other international lenders who provided us with funds under the bailout programme as their consent is required to avoid early repayment of the IMF loans triggering proportionate repayments to the other lenders,” Mr McGrath said.
“It is in everyone's interests that Ireland's debt position is made more sustainable and that this annual saving is achieved for the benefit of Irish taxpayers.”
The scheme being considered would see the bulk of the IMF loans repaid early in three tranches of €5bn each.
A potential deal would shave €20m to €25m of interest from every €1bn refinanced, the finance minister said. On €15bn that saving would add up to between €300m and €375m a year.
The scheme will require sign-off from all euro zone member states as well as the UK, Sweden and Denmark.
In the letter to Mr McGrath, Ireland mission chief Craig Beaumont said the IMF accepts early repayment with no charge or conditionality attached.
“Early repayments are not unusual, including examples in recent years of Latvia, Hungary and Iceland,” he wrote.
The IMF imposes a surcharge on the loan because of its scale.
That charge was 200 basis points, or two percentage points, but the IMF increased this in mid-January to 300 basis points, or three percentage points, because of the loan duration – pushing up the overall rate of interest.