Government considers early repayment of €8bn in post-crash loans
The Government is considering the early repayment of about €8 billion in loans secured in the aftermath of the economic crash . It has been calculated that any such move could generate savings of €90 million to the exchequer. On Wednesday, the Cabinet is understood to have agreed to the option of repaying loans earlier than scheduled dates over the next decade. However, no final decision has yet been taken, and will ultimately depend on whether it considered to be financially beneficial at the time. The plan would involve the repayment of loans either partially or in full of €8 billion originally secured under the European Financial Stabilisation Mechanism (EFSM) next year and in 2028. The EFSM provided financial assistance from the European Commission to Ireland and Portugal between 2011 and 2014. The money was conditional on implementation of economic reforms. Short-term loans were also provided to Greece under the arrangement. Ireland holds just over €15 billion in EFSM loans. Should it decide to go ahead with the move, it is understood the Government would issue new debt to pay them off. The plan as envisaged would see repayments, either in whole or in part, of €3 billion due to mature in 2032, €2 billion scheduled to be paid back in 2035 and €3 billion due in 2036. The Government would not repay the entire amount at one time but would look at exercising the option agreed by Cabinet at points in 2027 and 2028, if it was thought likely it would lead to savings for the State. In a statement on Thursday, the Department of Finance said that its Minister and Tánaiste, Simon Harris, had brought a memo to Government regarding potential early repayment of certain European Financial Stabilisation Mechanism loans. “The EFSM was used to provide financial assistance to Ireland between 2011 and 2014 in the context of the financial crisis. Any repayments would be subject to engagement with relevant European Institutions to finalise the process,” the statement said. Ireland originally secured €67.5 billion in bailout support from the EU, the IMF, Britain, Denmark and Sweden in a deal agreed in December 2010. Under the terms of that deal, the State is subject to post-programme surveillance until at least 75 per cent of the financial support is repaid. These biannual review missions assess the State’s economic, fiscal and financial situation, ultimately to measure Ireland’s capacity to repay its outstanding loans “Ireland originally borrowed €22.5 billion under the EFSM, with €15.3 billion currently outstanding,” the department said. “The proposal is to allow Ireland to repay up to €8 billion of these loans.” “Any repayments would take place during 2027 and 2028. This provides the National Treasury Management Agency (NTMA) with greater flexibility in managing the overall debt profile and would involve replacing existing EFSM debt with Irish sovereign debt. “The NTMA will determine whether individual repayments are beneficial in relation to its management of Irish debt. No repayments would be made that would result in a financial disadvantage to the State,” it said