Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 115: To ask the Minister for Finance if he can confirm whether a loan of up to €2 billion is being granted to the International Monetary Fund from Central Bank of Ireland resources this year; the timeframe for the repayment of this loan; the impact this loan will have on the public finances in the immediate and longer term; the terms or conditions attached to this loan; if the IMF will extend resources arising from this loan to low-income countries or will the resources from the loan target middle and high-income countries only; if new legislation is required for the granting of said loan and when such legislation is to be brought before Dáil Éireann; and if he will make a statement on the matter. [9487/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Deputy is referring to Ireland's participation in the International Monetary Fund's (IMF) New Arrangements to Borrow, (NAB). The NAB is essentially a set of credit arrangements between the IMF and member countries and institutions to provide supplementary resources to the IMF to forestall or cope with an impairment of the international monetary system or to deal with an exceptional situation that poses a threat to the stability of that system.

In January 2010, the Government decided, in principle, to approve Ireland's participation in the NAB and Ireland's provision to the NAB of a loan facility of approximately €2 bn, subject to agreement on terms and conditions. This followed on agreement by G20 Leaders in April 2009 to increase the resources available to the IMF by up to US$500 bn, thereby tripling the total pre-crisis lending resources of the IMF to US$750 bn, to support all IMF member countries with balance of payment (BOP) / financing needs, irrespective of income group. In September 2009, EU Heads of State agreed that the total EU contribution to this increase would be €125 bn. Ireland's share of this is approximately €2 bn.

Ireland's provision of the NAB loan facility will be met using Central Bank resources, as is the case with a number of other EU countries. If there is no drawdown of the facility, there will be no impact on the Exchequer. If there is a drawdown, the impact would only arise indirectly in terms of a potential reduction in the surplus income remitted to the Exchequer by the Central Bank - which at current interest rate levels is estimated at €15 million per annum, based on a drawdown of the full amount of €2 bn. If the drawdown is less, the indirect impact would be less.

The terms and conditions of the expanded NAB are still under negotiation between participating member countries and the IMF. While legislation will be required to implement the loan facility, this can only be done when the terms and conditions are finalised.

As set out in my reply to PQ 6962 /10, the implementation of the NAB loan facility is being preceded by the provision of a bilateral loan facility to the IMF of €1.3 bn and arrangements for bringing forward legislation to implement the bilateral loan facility at an early date are in hand.