Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 153: To ask the Minister for Finance in respect of the EU-International Monetary Fund Programme for Assistance, if a moratorium on interest payments was agreed as part of this deal and the period of this moratorium; the year in which interest charged will have to be paid; if this rolled up interest was in addition to the amounts to be provided by the EU and IMF or was it to be part of the overall assistance package; if he will outline the effect of a 1% reduction in interest rates on the actual payments to be made each year under this deal as originally drawn up notwithstanding the actual draw down of funds would vary depending on requirements; and if he will make a statement on the matter. [9673/11]

Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 154: To ask the Minister for Finance in respect of the EU-International Monetary Fund Programme for Assistance, if he will set out in tabular form the interest charge in 2011 and the actual interest to be paid in 2011 in respect of the draw downs to date, namely, €8.373 billion from the EFSM, the €5.836 billion from the IMF and the €3.592 billion from the EFSF, totalling €17.801 billion and the estimated interest charge in 2011 and estimated actual interest to be paid in 2011 in respect of funds projected to be drawn down during the remainder of the year; and if he will outline the position for each year for the remainder of the agreement; and if he will make a statement on the matter. [9674/11]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 166: To ask the Minister for Finance the position regarding efforts to secure a reduction in the interest rate attached to the Ireland EU-IMF-ECB Programme; and if he will make a statement on the matter. [9745/11]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 167: To ask the Minister for Finance if he will provide details of the technical basis of the calculation of the various interest rates attached to the separate elements of the Ireland EU-IMF-ECB Programme and the way he plans to achieve a reduction in the various rates for Ireland. [9746/11]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 168: To ask the Minister for Finance the amount of money, on full drawdown of the expected €74 billion of the €85 billion loan facility, that will be saved each year by a 1% reduction in the interest rate attached to the Ireland EU-IMF-ECB Programme; and if he will make a statement on the matter. [9747/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 153, 154 and 166 to 168, inclusive, together.

There is a general appreciation at European level of the importance of debt sustainability considerations in the pricing of EU and euro area financial assistance loans to member states. In this regard, the Heads of State or Government of the euro area decided on 11 March last that the "pricing of the EFSF (loans) should be lowered to better take into account debt sustainability of the recipient countries, while remaining above the funding costs of the facility, with an adequate mark up for risk, and in line with IMF pricing principles". The European Council also decided that the interest rate on the loans to Greece will be adjusted by 100 basis points. The position in relation to the pricing of Ireland's loans was considered in the context of wider political discussions but the Council did not take any decision on the matter. The pricing of Ireland's loan is being pursued vigorously by myself and my Department at European level. A decision on this is expected to be made by Eurogroup and ECOFIN Ministers. It is being addressed through that forum. However, every opportunity to present our case on the interest rate is being taken.

It is not possible at this stage to provide definitive estimates on the level of savings which would arise if reductions were agreed in the pricing of the EU loans to Ireland. However, I understand from preliminary analysis undertaken by the NTMA that a 1% target reduction in the interest rate could yield overall savings of the order of €725 million over the life of the €12.6 billion European Financial Stabilisation Mechanism (EFSM) and European Financial Stability Facility (EFSF) loans which have been drawn down so far. The estimated equivalent annual savings would be approximately €130 million. I emphasise that these estimates are based on the amounts drawn down to date. The actual savings that would arise from any interest rate reduction secured would depend on the total amount of funds drawn down from the EFSM and the EFSF and on the maturity profile of any such loans. The total amount of funding available from the EU and the IMF is €67.5 billion, €45 billion of which comes from the EU through the EFSM, the EFSF and the bilateral loans. For illustrative purposes, the saving arising from a 1% reduction on the interest rate charged on the full €45 billion available from EU sources would be €450 million for each full year borrowed. If this €45 billion was held for an average 7.5 years, i.e. the term envisaged in the programme, the total saving would amount to €3.375 billion. There is no moratorium on interest payments on any part of the funding agreed under the EU-IMF programme.

As regards the interest rates Ireland is paying, the average (blended) interest rate on the €67.5 billion available to be drawn from these three external sources was estimated to be 5.82% on the basis of market rates at the time of the agreement. The actual cost will depend on the prevailing market rates at the time of each drawdown and could be higher if market rates have deteriorated. The average life of the borrowings, which will involve a combination of longer and shorter dated maturities, is 7.5 years. The interest on Ireland's borrowing from the EFSM is based on the cost to the EFSM of raising funds in the markets plus a margin of 2.925%. In the case of the EFSF, the cost of funds for Ireland is based on the cost to the EFSF of raising funds in the markets plus a margin of 2.47%, plus the cost of credit enhancement features which can vary over time but which amounted to 0.54% on the loan drawn down from EFSF on 1 February 2011.

Interest on borrowings from the IMF will be paid quarterly at the IMF's standard interest rate applying to countries which draw on its Extended Fund Facility. This rate is set by reference to the IMF's basic rate of charge plus surcharges, which vary based on the amount of funds drawn relative to a country's IMF quota and the duration for which funds are outstanding. The Special Drawing Rights interest rate, which is expressed as an equivalent annual bond yield, is calculated weekly by the IMF with reference to financial instruments of the component currencies in the Special Drawing Rights basket: the three-month Eurepo rate; the three-month Japanese Treasury Discount bills; the three-month UK Treasury bills; and the three-month US Treasury bills. Up to a threshold of three times a country's IMF quota, as determined by the IMF, a margin of 1% over the SDR rate is payable. On all funds beyond that threshold, an additional margin of 2% is payable plus a further margin of 1% if the funds are outstanding for more than three years.

In view of this calculation method, the annual interest cost is variable. The annual interest amount will be known with certainty when the full year interest payments have been made. Based on current market conditions, the NTMA has estimated an effective average annual interest rate cost for borrowing from the IMF of around 5.20%, taking into account quota revisions and the cost of hedging and assuming drawdown of the full €22.5 billion available from the IMF. The interest rate for the UK loan will be the 7.5 year sterling swap rate plus a margin of 2.29%. Discussions on the Swedish and Danish loan agreements are continuing and the interest rate to be charged forms part of the discussions. The interest rates and actual interest to be paid in 2011 in respect of draw downs to date is set out in the following table:

* The SDR rate on the IMF drawdown reflects the lower rate arising from our recent quota increase. It is lower than the overall indicative rate for this funding as it is the initial drawdown and accordingly a portion of the drawdown attracts a lower rate of interest as it is less than 3 times quota. An additional surcharge is added for any borrowing in excess of 3 times quota that is outstanding for more than three years. The 5.2 % euro rate shown is the estimated equivalent rate at current market rates and taking account of an expected future increase in Ireland's IMF quota when the full amount of the SDR floating rate funds available under the Programme is swapped into euro fixed rates.

** This is the net disbursement amount. The drawdown under the EFSF is €4.2 billion but some €600 million of this is applied to credit enhancement measures, leaving €3.592 billion available for the Exchequer.

*** This is the net disbursement amount. Taking account of the €600 million in credit enhancement measures in the EFSF funding, the total drawdown amount is €18.4 billion.

**** The effective interest rate on the total amount is calculated using the 5.2% euro equivalent interest rate shown above for IMF funding.

The interest payments and interest rates for the remaining disbursements in 2011 and later disbursements will not be known until the money is actually drawn down as the amount of interest payable is determined by both the timing of the first coupon payment and the interest rate at which the loan is issued. As stated in a reply to a parliamentary question on 20 April last, the profile of drawdowns for the external funding is subject to ongoing review. Following the recent review mission, a revised schedule is being discussed by the NTMA, the EU, the ECB and the IMF. This profile will be published when it is finalised. I expect this to take place shortly. The actual level of drawdown will depend on a wide range of factors including economic growth and the performance of the public finances under the EU-IMF Programme.