Brian Cowen (Laois-Offaly, Fianna Fail)

The rate that is being provided compares favourably to the cheapest international credit available, namely, that on offer from the IMF, for this purpose. Ireland is the first country to use the mechanism to which I refer for this purpose. Countries that avail of it in the future will be obliged to deal with similar situations. In the context of humanitarian or other aid offered to countries that were in difficulties, it was not the case, as is the position with regard to Ireland, that a lender-of-last-resort scenario obtained.

The legal basis for the application of a margin was laid down by ECOFIN in May. The specific terms and conditions were signed off by ECOFIN in recent weeks following the completion of the negotiations which took place here. The rate that is applicable in respect of the mechanism is the same as that which applies in the case of funding from the IMF, which - as already stated - is the cheapest source of international credit. It is a facility from which the Government can draw down funding during the next three years at the rates to which I refer over an average period of seven and a half years. It is a matter for the Government to decide what to draw down and when to draw it down. If money becomes available on the markets at a cheaper rate in the intervening period, it will be open to the Government to seek to access such money. The reality is that we either seek these funds at the rate on offer or that we return to the secondary markets, where the cost of borrowing is more than 8%, in search of money to fund the State beyond July next. We already have in place pre-funding arrangements to that date.

See this speech in context