The International Monetary Fund (IMF) has
confirmed that Ireland can pay back its bailout loans from the Fund early
without having to pay a penalty.
In a letter to Michael McGrath, Fianna Fáil Finance
spokesman on finance, from Craig Beaumont, the IMF mission chief for
Ireland, the latter said the IMF accepted early payment of credit with no fee or
He cited the recent examples of Latvia, Hungary and Iceland.
The terms of Ireland's 2010 international bailout
included a loan of €22.5bn from the IMF, with a blended average interest rate of
4.99% - - which is more than twice the cost of borrowing on the markets today.
The yield on the Irish 10-year
sovereign bond today is 2.20% - - the German bund rate is 1.06%; the Netherlands
equivalent rate is 1.26% and Finland's is at 1.23%. Spain's rate is 2.52%.
"The IMF's confirmation that Ireland may repay
its loans to the Fund early without any penalty opens up the possibility of a
very significant annual saving for the State and every effort must be made now
to achieve this," Michael McGrath said.
"Given the benign borrowing conditions at present, the €20bn cash stockpile held
by the NTMA and the fact that we are paying almost 5% on the IMF loans, it makes
perfect sense for the government to pursue this issue," he added.
Copy of letter [pdf]