Michael McGrath (Cork South Central, Fianna Fail)
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88. To ask the Minister for Finance if there is an opportunity for further interest savings as a result of early repayment of European Union and International Monetary Fund loans; and if he will make a statement on the matter. [39984/15]

Michael Noonan (Limerick City, Fine Gael)
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My Department, in conjunction with the National Treasury Management Agency (NTMA), will always seek to avail of any opportunity for savings on the cost of our EU-IMF programme loans.

As the Deputy is aware, we have already achieved significant savings in the cost of these loans. The reduction in the interest rates on the EU element of these loans, achieved in 2011, resulted in estimated savings of some €9 billion over the initially envisaged lifetime of these loans.  The repayment of some 81 per cent of IMF loans, which was completed earlier this year, will generate further interest savings, estimated at over €1.5 billion, over the original lifetime of these loans. The current interest rate on the residual IMF loan balance is just 1.05 per cent.

There is limited scope for additional interest savings resulting from further early repayment of EU-IMF programme loans.

Firstly, unlike in the case of the early IMF repayment of late 2014 and early 2015, Ireland would be subject to a break-cost charge were it to repay some of the other loan facilities early. These charges could negate any potential savings arising from a potential early repayment.

In addition, the early repayment of programme loans to the IMF, EFSF, EFSM, United Kingdom, Sweden or Denmark would trigger automatic mandatory proportional early repayments to each of the other programme funding partners unless, as was the case with the early IMF repayment, the other lenders agreed to waive the mandatory proportional early repayment clause.  A condition of this agreement to waive this clause in the case of the early IMF repayment was that Ireland retains a significant element of IMF funding in order to maintain the IMF's participation in post-programme monitoring for the duration initially envisaged, which is out to 2021.

Finally, I would add that as part of the recent re-financing of a €5 billion EFSM maturity, resulting from the maturity extensions to EFSF and EFSM loans granted in mid-2013, the EU raised funding at a weighted average yield of just over 1.1 per cent and with a weighted average life of approximately 14 years. As of close of business Monday 9 November, the yield on the 2.4% Irish Government Treasury Bond maturing in 2030 was 1.80 per cent, approximately 70 basis points higher than the weighted average yield on the re-financed EFSM loan.