Written answers

Tuesday, 3 May 2011

9:00 pm

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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Question 133: To ask the Minister for Finance further to Parliamentary Question No. 270 of 12 January 2011, the new interest rate charged on International Monetary Fund borrowings as a result of the quota revision; if he will provide a breakdown of this rate showing the margin added; and if he will make a statement on the matter. [9315/11]

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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Interest on borrowings from the IMF is charged as follows:

· For borrowings up to three times quota, the interest rate is the SDR rate (which is calculated on a weekly basis – it is 0.55% as of 2 May 2011) plus a margin set by the IMF (currently 1%).

· Borrowings above the threshold of three times quota are charged an additional 2%.

· From 18 January 2014, the third anniversary of the 1st disbursement of the IMF funds to Ireland, an additional 1% is charged on borrowings over three times quota.

· In addition to the interest charge there is a once off up front handling fee of 0.5% of all draw downs.

On 4 March 2011, Ireland's IMF quota increased from SDR 838.4 million to SDR 1,257.6 million.

The first drawdown of IMF funds under the Programme took place on 18 January 2011. The amount was SDR 5,012,425,200, equivalent to some €5.8 billion, for an average life of 71⁄2 years.

Due to the quota change, SDR 1,257.6 million of the SDR 5.0 billion drawn on 18 January last is now subject to a margin of 1% instead of 3%. In annual payment terms, this represents a saving of SDR 25.2 million. After 18 January 2014, the annual saving will increase by SDR 12.6 million as the 1% surcharge that applies from that date will not apply to the additional SDR 1,257.6 million that is now within three times the quota.


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