Monday, January 9, 2012

3.55% Interest on the EU/IMF loans

Here is an update of a table showing the interest rates on the loans we are getting as part of the EU/IMF programme (HT: Kevin).  The data is for loans drawn down as of the 14th of November 2011.  Click image to enlarge.

EU IMF Interest Rates Nov 2011

When we last looked at this back in August for loans drawn down by June the average interest rate was 5.58%.  We can now see that this has been reduced to 3.55%.  This is because of the reduction in the EU loans agreed at the EU summit on July 21st last.

The interest rate on loans from the European Financial Stability Mechanism (EFSM) has fallen from 6.99% to 2.97%, while the interest rate on loans from the European Financial Stability Fund (EFSF) has fallen from 5.90% to 3.06%.

The highest rate is the 4.83% that applied to the UK bilateral loan but that is due to be reduced.  As a result of this the IMF loans will have the highest rates but they could also be reduced as there are some suggested changes to Ireland’s quota with the IMF.

A previous post suggested we need to source around €25 billion of funding to get through 2014, as the €67.5 billion of funds under the current EU/IMF programme will be exhausted by the end of 2013.  From the above we can see that we need to be in a position to begin repaying the EU/IMF loans (by borrowing from someone else) from July 2015. 

Replacing funding that comes at a cost of 3.55% will not be easy but for the moment it does keep a cap on our interest payments.

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