Written answers

Tuesday, 27 September 2011

Department of Finance

State Banking Sector

9:00 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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Question 120: To ask the Minister for Finance the total cost to the State of the Anglo Irish Bank and Irish Nationwide Building Society promissory notes including broken down by the interest payable on the promissory notes, the interest on borrowing to service the note and the capital payments; if he will detail the payment schedule and the date when the full debt including interest will be paid in full; and if he will make a statement on the matter. [26029/11]

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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The promissory notes were issued in various tranches with different interest rates (four tranches for Anglo and 2 tranches for INBS. The total interest cost for the State for all tranches of the Anglo and Irish Nationwide promissory notes is circa €17 billion with annual repayments of €3.1 billion per annum. These annual repayments reduce over time as the various tranches of the promissory note are repaid. The final payment on the promissory note of circa €0.1billion will be made on 31 March 2031. Set out is a detailed aggregated schedule of capital repayments and interest on the promissory notes.

€bnTotal InterestRepaymentsTotal Capital Reduction
31/3/20110.63.12.5
31/3/2012-3.13.1
31/3/20130.53.12.6
31/3/20141.83.11.2
31/3/20151.73.11.3
31/3/20161.73.11.4
31/3/20171.53.11.5
31/3/20181.43.11.6
31/3/20191.33.11.7
31/3/20201.23.11.9
31/3/20211.13.12.0
31/3/20220.93.12.2
31/3/20230.73.12.3
31/3/20240.62.11.5
31/3/20250.40.90.5
31/3/20260.40.90.5
31/3/20270.30.90.6
31/3/20280.30.90.6
31/3/20290.20.90.7
31/3/20300.10.90.8
31/3/20310.00.10.0
16.847.930.6

The Deputy should be aware that the funds which become available to the State as a result of borrowing undertaken by the Exchequer are not generally assigned to one particular area of expenditure. Rather they are available, along with the funds sourced from revenues such as tax revenue, non-tax revenue and capital receipts, to fund overall expenditure. Accordingly, there was no one tranche of borrowing that was undertaken solely for the purpose of funding the Promissory Note payments to Anglo Irish Bank and Irish Nationwide Building Society. The draw downs of funds so far under the Joint EU/IMF Programme of Financial Support have been used for a range of different purposes including of course the general running of the day-to-day operations of the State. It is difficult therefore to isolate precisely the exact cost of the interest payments on the borrowing undertaken to fund the Promissory Note payments. However, for illustrative purposes, on the basis of the original 5.8% blended average interest rate which applied to borrowing under the Programme, the interest costs on borrowing of €3,060 million would be just under €180 million per annum. In light of the recently agreed reduction in interest rates on funding available under the Joint EU/IMF Programme of Financial Support however, the estimated interest cost on such borrowing reduces to approximately €115 million per annum.

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