Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 39: To ask the Minister for Finance the estimated cost to the State arising from any commitments contained in the European Stability Mechanism. [27665/11]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the European Stability Mechanism (ESM) will replace the temporary mechanisms of the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM) which will remain in force until June 2013. The function of the ESM will be to mobilise funding and provide financial assistance, under strict conditionality, to the benefit of Euro-Area Member States, which are either experiencing, or threatened by, severe financing problems, if seen as indispensable to safeguarding the financial stability of the euro area as a whole.

Under the proposed ESM Treaty, the capital structure of the ESM will have a total subscribed capital of €700bn. Of this amount, €80 billion will be in the form of paid-in capital by the Euro Area Member States, paid in five equal annual instalments from July 2013. The balance of €620bn will be callable capital. The contribution key for each Member State is based on the ECB capital contribution key. For Ireland the key is 1.592% of the total paid and committed capital.

Therefore Ireland's share of the €80 billion of paid in capital will be just above €1.27bn to be paid in five equal instalments, of approximately €254 million each, starting in July 2013. Ireland's share of the €620bn callable capital will amount to €9.87bn.

As the Deputy will be aware, the Euro Area Heads of State or Government (HOSG) decided on 21 July 2011 to increase the flexibility of the EFSF and the ESM by allowing them to act on the basis of a precautionary programme, finance recapitalisation of financial institutions through loans to Governments and to intervene in primary and secondary markets on the basis of ECB analysis. This decision means that the ESM Treaty signed by Euro Area Finance Ministers in July 2011, subject to the necessary Parliamentary procedures, will now require amendment. Discussions are continuing at technical level on the text of these amendments. When finalised, these amendments along with the original Treaty, will be brought forward in draft legislation later this year.