73. Deputy Pearse Doherty asked the Minister for Finance his plans to repay bilateral and other sovereign loans at an earlier date than scheduled; and if he will make a statement on the matter. (Question 49651/17 asked on 23 Nov 2017)

Minister for Finance (Deputy Paschal Donohoe): The Deputy will be aware that we have already repaid early some 81 per cent of our IMF loan. This early repayment, which was completed in 2015, generates significant interest savings. It also reduces the refinancing requirement in the coming years as debt that was originally to mature over the period July 2015 – January 2021 has been replaced with longer-term debt.

The Deputy will also be aware that on 7 September this year, I announced Ireland’s intention to repay early and in full the remainder of the IMF loan as well as the bilateral loans from Sweden and Denmark. This will further reduce the debt interest bill. In addition, replacing EU-IMF Programme related debt with marketable debt increases the purchase capacity of the European Central Bank (ECB) for Irish government bonds.  

The third of the bilateral lenders is the UK. However, it is not in Ireland’s financial interests at this time to repay early the bilateral loan from the UK. This is a fixed rate loan and the loan agreement contains a break clause which would be triggered in the event of early repayment. The associated costs would offset any potential interest savings.

Similarly, it is not in Ireland’s financial interest to repay early the EFSF and EFSM loans as these facilities can, on a like-for-like basis, raise funding at lower interest rates than Ireland. 

Early repayment of the loans from the IMF, Denmark and Sweden requires a waiver of the right from the remaining Programme lenders – the EFSF, the EFSM and the UK – to proportionate early repayment. A waiver has already been secured from the UK and the legal processes to secure the waivers from the EFSM and EFSF are underway.