THE GOVERNMENT IS going to repay the €5.5 billion owed to the IMF, Sweden and Denmark early, which will lead to a saving of €150 million according to the National Treasury Management Agency.
The Minister for Finance and Public Expenditure and Reform Paschal Donohoe made the announcement this afternoon.
A statement released by the department said that officials from the Department of Finance and the NTMA have been examining options to improve Ireland’s debt sustainability.
On the basis of NTMA advice and departmental analysis, the Minister intends to proceed with these early repayments.
The NTMA estimates that interest savings for the Exchequer from the early repayment of these loans could amount to €150 million over the remaining lifetime of the loans.
Minister Donohoe said: “Ireland greatly appreciates the support and assistance from the IMF and our European partners, which was provided at a time of great uncertainty for our country and which was key to our path to recovery. Their support, friendship and solidarity will not be forgotten.
Actions taken in recent years, and the sacrifices made by our citizens, have laid the foundations for a solid and sustained economic recovery in Ireland. This has resulted in Ireland becoming the fastest growing economy in the euro area and our sovereign funding position now regarded as comfortable and in a healthy funding position at present.
“These early repayments – in particular the early IMF repayment – will mark another very significant milestone for Ireland as we move forward, signalling the strength of our economy and sovereign funding position generally.”
Early repayment of the loans requires agreement from European lenders to waive the proportionate early repayment clauses in our respective loan agreements. It’s understood that formal discussions will now begin to seek the necessary waivers.
The Minister has also been in contact with the IMF Managing Director Christine Lagarde who has confirmed support for the early repayments. Lagarde has also agreed that the IMF could accompany the troika during their six month review, but in a downgraded manner, if this is required by EU lenders.
Director of funding and debt management at the NTMA Frank O’Connor said: “Replacing Ireland’s loans from the IMF, Sweden and Denmark further reduces our debt service costs, which have declined considerably in recent years.
The Exchequer is in a healthy funding position. At end-August we had €20 billion in cash and liquid assets.
O’Connor added that this is not the first time Ireland has made an early repayment of programme loans.
“The NTMA has previously implemented arrangements to repay over €18bn in IMF facilities to take advantage of reduced market borrowing costs and create savings for the Exchequer.”
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