Michael McGrath (Cork South Central, Fianna Fail)
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Question 150: To ask the Minister for Finance if he has raised the issue of an interest rate reduction on the three bilateral loans with the UK, Swedish and Danish Governments; the response he has received; and if he will make a statement on the matter. [15568/11]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 151: To ask the Minister for Finance if he will provide details of the interest rates being charged on the three separate bilateral loan arrangements in place with the UK, Sweden and Denmark, under the EU and IMF programme.. [15569/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 150 and 151 together.

At this point, no funds have yet been drawn down under the bilateral facilities. The UK facility was signed in December 2010. The interest rate on the amounts drawn down will be based on the Sterling pound mid-market semi-annual swap rate at the time of drawdown plus a margin of 2.29%. At the time that the UK loan facility agreement was signed the overall interest cost was calculated at about 5.9%, similar to the blended rate calculated by the EU Commission from the troika at that time. The actual rate will depend on the market rates prevailing at the time of disbursement.

The Danish and Swedish loan facilities have not yet been signed but are near completion. The interest rate on each will be based on the 3-month Euribor interest rate, a market reference rate of good standing, plus a margin yet to be agreed.

I have not formally raised the issue of an interest rate reduction with the UK Government to date. My priority is on securing an interest rate reduction for Ireland at EU level first.

Michael McGrath (Cork South Central, Fianna Fail)
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Question 152: To ask the Minister for Finance the date on which he became aware that any reduction in the interest rate on the EFSF and EFSM funding under the EU and IMF programme would only apply to funds not yet drawn down; and if he will make a statement on the matter. [15570/11]

Michael Noonan (Limerick City, Fine Gael)
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The assessment of the impact of changes in the interest margin on our EU loans is based on a number of assumptions about the level of the reduction, the date on which it applies and the amount of the loan to which it applies. Each of these elements has been changing in the past number of months. Because of this, the figures provided for any interest rate reduction have been qualified by statements to the effect that they are illustrative and that we will not know the precise position until the actual arrangement is finally agreed. Also, a decision to grant a reduction in the interest margin is a political one at EU level and is decided on a case by case basis. No change has yet been agreed for Ireland.

In mid–May, the Eurogroup decided on the margins for the EU financial assistance to Portugal which – if applied to Ireland's EU funding - would amount to a reduction of 0.6%. This crystallised the level of reduction likely to be available to Ireland. My understanding at that time also was that the benefit of any reduction would not apply retrospectively. More recently, I have received clarification that, if we were to get the benefit of the arrangements that apply to Greece, retrospection would not apply to any interest payments made before the decision.

There is, therefore, a range of options in terms of the value of a reduction and this depends on the terms granted, which are decided on a case by case basis. The following estimates of the likely impact illustrate the extent of this range. If the same interest rate reduction as Portugal's is applied (i.e. the equivalent to 0.6% off Ireland's margin) to the coupons on future disbursements from the EU funds only (i.e. all the funds available to us under the EFSF and the EFSM) then the savings would be approximately €150 million per annum. Similarly, if the same interest rate reduction as Portugal's (i.e. the equivalent to 0.6% off Ireland's margin) was applied to all future coupons on those EU funds (EFSF and EFSM) then the saving could be up to €240 million per annum. The upper end of this range of options referred to earlier would be a 1% reduction applied to all future coupons for both the EU funds and the bilateral loans, which would provide savings of the order of €450 million per year, assuming all the funds are drawn down and that the recent Portuguese decision on the cost of funds would not be applied in the Irish case.

The value of any interest rate reduction granted to Ireland will be known if and when a decision is taken on granting such a reduction, and on the terms and conditions on which it is to be granted. We will continue to press our case for such reduction. Although no decision has yet been made on an interest rate reduction for Ireland, based on the latest information available as set out above, any benefit is unlikely to be at the higher end of the range outlined above.

Michael McGrath (Cork South Central, Fianna Fail)
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Question 154: To ask the Minister for Finance if the 0.25% increase in ECB interest rates on 7 April 2011 has had an impact on the interest rate charged on the separate funding elements of the EU and IMF programme; the interest rate that applied before and after the rate increase for each of the separate elements, IMF, EFSF, EFSM and bilateral loans; and if he will make a statement on the matter. [15572/11]

Michael Noonan (Limerick City, Fine Gael)
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There is no automatic linkage between ECB interest rate changes and the interest rates charged by the EU and the IMF on their various loans to Ireland. In the case of the IMF, the Special Drawing Rights (SDR) interest rate is somewhat influenced by a European 3-month collateralised lending rate, EUREPO, which is correlated, but not linked, to the ECB interest rate. The other elements of the IMF's SDR interest rate are the returns on 3-month U.S. Treasury Bills, three-month U.K. Treasury Bills and three-month Japanese Treasury Discount Bills. However, this SDR interest rate is a minor component of the overall cost and most of the IMF interest rate to Ireland is made up of surcharges. The NTMA has converted the interest rate liabilities to the IMF to fixed rate euro borrowings thereby averting any minor influence that ECB interest rate changes may have on the IMF interest rate for borrowings already entered into. In the case of new borrowings, the level of short term interest rates is one of a number of factors influencing the level of long term interest rates and through this the cost of borrowing.

In the case of the EFSF and EFSM, the interest rates charged to Ireland on existing borrowings are fixed and, therefore, not directly influenced by ECB interest rate changes – any influence is indirect. With respect to their future lending to Ireland, it is not possible to say to what extent ECB interest rate changes will have a bearing.

Information on the existing disbursements to Ireland, including interest rates, is set out in the following table. These interest rates will not be affected by ECB interest rate change of 7 April 2011.

1. The current SDR floating rate (2.345%) on the IMF drawdown reflects the lower rate arising from a quota increase for Ireland on 4th March 2011. The estimated Euro Equivalent rate on credit outstanding is 4.77% (pricing 31st May 2010) after hedging.

2. This is the loan amount. The net disbursement, the amount made available to the Exchequer, from the EFSF is €3.592 billion after credit enhancement measures.

3. Taking account of €600 million in credit enhancement measures in the EFSF funding and issuance Price by the EFSM and EFSF, the total cash received amount is €22.357 billion.

4. This is the overall Net Disbursement Amount received by the Exchequer.

Catherine Murphy (Kildare North, Independent)
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Question 155: To ask the Minister for Finance if Ireland is contributing to the Greek bailout; if so, the amount of same; the rate of interest; and if he will make a statement on the matter. [15575/11]

Michael Noonan (Limerick City, Fine Gael)
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Under the Euro Area Loan Facility agreed for Greece in May 2010, stability support in the form of a joint Euro area/IMF financing package of

€110 billion is being provided to Greece over a three-year period.

Ireland contributed €345.7 million (net of a 50 basis points service charge) in respect of the first two tranches of the loan in 2010. Ireland withdrew from further participation in the facility when the EU/IMF Programme of Financial Support for Ireland was negotiated.

Interest payments on the loan in respect of Ireland's contribution to the facility are due quarterly. The principal is repayable quarterly over two years starting in 2013. Interest is calculated on the full amount of the loan (i.e. including the 50 basis points service charge). The rate of interest is three-month EURIBOR (the average rate at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone) plus 300 basis points (3 percentage points) for the first three years and three-month EURIBOR plus 400 basis points (4 percentage points) thereafter.

The next interest payment is due on 15 June 2011 and the interest rate that will apply is 4.173%.