Michael Noonan (Limerick City, Fine Gael)

The EU portion of the EU-IMF programme funding for Ireland is made up of the European financial stabilisation mechanism, EFSM, the European financial stability facility, EFSF, and the bilateral loans from the UK, Sweden and Denmark. Of these, only the EFSM relates directly to the European Union. Based on full drawdown of the €22.5 billion from the EFSM, the current margin of 2.925% and an average maturity of 7.5 years, the gross margin would be about €4.9 billion, out of which its costs would have to be deducted. Interest paid on EFSM loans, including the margin, will be entered into the EU budget as miscellaneous revenue from which all member states, including Ireland, benefit.

The margin on borrowing from the EFSF, on the other hand, accrues to the EFSF in the first instance. Based on the current margin of 2.47%, full drawdown of the €17.7 billion available and average maturity of 7.5 years, the gross margin will be around €3.3 billion. This ultimately accrues to the EFSF guarantors.

The margin from bilateral loans accrues to the relevant country. Only the UK facility has been agreed and it provides for a margin of 2.29%, providing a gross margin in the order of €650 million. The agreements, and therefore the margin, for Denmark and Sweden have yet to be finalised. Taken together, the total margin applying under existing arrangements could be of the order of €9 billion over the period.

It is the Government's strong position that the margin being charged on loans from both the EFSM and the EFSF is excessive. This argument, which has been supported by the European Commission, is one I and my Government colleagues, plus our officials, make at every possible opportunity. It is safe to say my ECOFIN counterparts are fully aware of this issue and I will continue to remind them and press them on this matter.

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