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IMF say Ireland can repay loans early

Tuesday, August 12 11:00:30

Ireland will be allowed to repay its bailout loans to the IMF early, potentially saving the Irish taxpayer many millions of euro, according to reports today.

In a letter to Fianna Fail Finance spokesman Michael McGrath, the IMF mission chief for Ireland, Craig Beaumont, said the IMF accepted early payment of credit with no fee or charge, RTE reported this morning.

He cited the recent examples of Latvia, Hungary and Iceland.

Ireland is currently paying a blended rate of 4.99pc on the IMF portion of our troika loans, which includes a surcharge for borrowing above our IMF loan quota.

Under the troika bailout agreement, if Ireland makes an early repayment on its IMF loan, it also must make an equivalent repayment on its EU borrowings.

However, the EU borrowings are at a lower interest rate which means the requirement to repay all the loans at the same pace would wipe out any benefit from the early repayment of the IMF portion of the borrowings.

Some estimates put the possible annual saving in excess of E300m, but it would require the consent of the all lenders under the troika programme.

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