IMF/ECB Ireland Loan details and Michael Noonan’s mourneful reply

My view of the interest rate averaging 5.8% for an average of seven and a half years term is that it is too high.

Summary Numbers – Total bailout €85 billion

The state will put up €17.5 billion (€9 -10 billion from Pension reserve Fund and €7.5 billion form cash balances from previous bond sales.
Average interest rate for foreign money is 5.8%
The 5.8% interest rate per annum only applies to the €45 billion European contribution.
European Stabilisation Fund will lend us €22.5 Billion at 6.3%
Other loans are at 3.1%
The IMF will lend us €22.5% at around 5.8%.
UK directly €4 billion at 6% (plus €3.46 billion from UK Treasury via the IMF and EU for country rescues)
Sweden €598 million and €393 million from Denmark

Anglo Irish bank owes €1`5 billion to European Financial Institutions and they will get their money back.

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Michael Noonan, Fine Gael Finance Spokesman said:-

“This is a hugely disappointing result for the country. It’s hard to imagine how this deal could have been much worse. People are right to feel frightened, and worried about the future, when our own Government has sold out the country on such lousy terms.

“The Government was cleaned out in the negotiations and has not acted in the best interests of Ireland. At the very least we could have expected a low rate of interest on the loans, EU agreement on a jobs and growth package, and agreement to share the cost of rescuing the banks with the bond holders. The Government came away with none of these.

“Fianna Fáil has once again sacrificed taxpayers’ interests in order to bail out the banks.

“The interest rate of 5.8% is far too high and verges on the unaffordable. The lack of significant detail on plans to restructure the banks is worrying. A huge chunk of the National Pension Reserve Fund and other domestic funds will be poured into a black hole to recapitalise the banks. This money could have been used to stimulate the economy and provide jobs.

“As a sovereign State and a fully paid-up member of the Eurozone, Ireland could have struck a much better bargain. The fact that the EU and ECB have asked us to bail out foreign bond investors who invested foolishly in our banks, with the pension fund money accumulated with difficulty over many years, should have been used as a powerful bargaining chip. It clearly was not.

“The pushing out of the deadline to reach the 3% deficit target simply reflects a lack of belief in the Government’s growth strategy. Furthermore, Ireland will still have to impose €15 billion worth of cutbacks over the next four years.

“It was a Government Minister who first used a poker analogy to describe these negotiations. Well, the Government has been out-bid and out-negotiated at every turn. For some reason the Government decided to play it soft, and allowed the IMF, the EU and the ECB to win hands down.”

Joint Statement on Ireland by EU Commissioner Olli Rehn and IMF Managing Director Dominique Strauss-Kahn

Transcript of a Press Conference on Ireland

IMF Reaches Staff-level Agreement with Ireland on €22.5 Billion Extended Fund Facility Arrangement