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Deal on IMF bailout loans expected to save us about €1.5bn - Noonan

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Finance Minister Michael Noonan; the recovery is happening

Finance Minister Michael Noonan; the recovery is happening

Finance Minister Michael Noonan; the recovery is happening

Euro zone finance ministers agreed a deal in principle on the repayments of our IMF bailout loans which will mean significant savings for us.

While the deal is not formal yet,  the idea – to refinance expensive IMF rescue loans with cheap finance raised in the market  - is expected to save €375m a year in the State’s interest bill.

Finance Minister Michael Noonan said today that the deal will mean savings of about €1.5bn over the five to seven year lifespan of the loans in question.

The IMF loans carry an interest rate of nearly 5pc, compared with a market rate of under 2pc.

The 5pc rate applies to €18bn of the €22.5bn of IMF bailout loans while it is understood the National Treasury Management agency will refinance the loans in three tranches once the deal has been formalised.

Minister Noonan said "unanimous agreement" had been achieved from euro zone finance ministers.

European Stability Mechanism boss Klaus Regling welcomed the move which will mean we pay back the loans early.

He said it will mean better "debt sustainability" for Ireland.

Under the original bailout deal, Ireland also had to repay all its creditors at the same time, unless it first obtained their agreement.

The deal may have an impact on the size of the upcoming Budget 2015.

Minister Noonan had said on his way to the meeting of finance ministers in Milan, Italy earlier today that ministers were supportive.

However, a general election happening in Sweden this weekend means that politically that country’s government  may not be able to make a commitment to approve the Irish deal, pending the outcome of the vote.

The German government supports the Irish scheme, but it must also be approved by the German parliament, the Bundestag, Minister Noonan said.

Online Editors