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THE EUROPEAN COMMISSION has this morning confirmed it is to reduce the interest rate charged on its third of Ireland’s bailout loans – saying the change will apply to money Ireland has already drawn down as well as any future borrowing.
The Commission says it is cutting the interest rate on its €22.5bn of loans, which Ireland has taken from its European Financial Stability Mechanism, down to 2.59 per cent – which is exactly equal to the interest rate the EU pays to borrow the money it then passes on to Ireland.
The cut means that the European Commission is now making zero gains on its loans to Ireland – and means Ireland will pay less interest than it first thought on the cash it has already taken from the Commission.
Stats released by the National Treasury Management Agency this summer showed that Ireland had already taken almost €11.4bn from the cash being made available to it – though it appeared the original interest rate being applied to this was disputed.
In January the European Commission had said Ireland would pay 5.51 per cent interest on the EFSM loans – but in July, Michael Noonan said the average interest rate was actually 5.91 per cent in practice.
Noonan told the Oireachtas’ finance committee in July that he anticipated the EFSM interest rate would be cut in line with that applied to loans from the European Financial Stability Fund – the bailout vehicle funded only by the Eurozone members.
The EFSF interest rate was cut by around 2 per cent at a summit of European leaders in July, with Noonan estimating at the time that the improved deal would save Ireland around €900m a year.
It is understood that this figure included the anticipated reduction of the interest rate on the EFSM loans as well as the EFSF. The interest rate on the IMF portion of the bailout is expected to be cut later this year when the Fund upgrades Ireland’s membership status.
The EFSF and EFSM are to be merged into a new European Stability Mechanism in 2013. The implications of the reduced bailout rate will be discussed at the Oireachtas committee on EU affairs tomorrow.
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Now this is fantastic news.
The Greeks have got their uses!
Good news of a kind. But we are still paying back money for ‘loans’ that the general population did not run up.
Do you realise that without this loan Ireland would have had to go to the bond markets to finance itself? The interest rates we would have had to pay there would have been much much higher. This money isn’t just used for the banks, it’s also used by Ireland to fund itself as a country. Without these funds essential services like hospitals, schools and many more services that impact you would have no State funding.
You do realise that if we had not been forced into taking over the private debt from the banks we would not have ended up being shut out of the money markets? The markets knew straight away that forcing Ireland to cover the those debts as well as the short fall in current funding meant that we were a bad bet regarding funding. We used to have 30 billion in a pension fund that could have been used to invest in Ireland. That has gone into the black hole that is Anglo and the other banks. Most if not all of that money will never be seen again.
Yeah but your right I should doff my cap and say many thanks gov for your largesse ECB/EU/IMF.
I’m not disputing your points, in fact I completely agree, but there isn’t anything much we can realistically do about it at this stage other than stay the course we’re set on.
I don’t think many commentators are doffing their caps, Kerry Blake. Unfortunately, we will still have to pay. The reduction is better than an increase. People haven’t forgotten why we are at this point. We are here because of the complete failure of Govt to govern & do the right thing as well as the complete failure of opposition ( some who are now in power ) to hold Govt to account on behalf of the nation. At the end of the day, the reduction is better than an increase. It also suggest that our shredded reputation in Europe is being mended & a recognition that we Irish taxpayers are prepared to do what it takes to get back on track. Of course we still have to pay – unfortunately. Out of this, I’ve gone from being pro European in many respects.
I’d say Sarkcozy is fuming lol.
Sarkozy is laughing up sleeve.
The Irish taxpayer has been bumrushed into covering the losses of European banks and bondholders in Ireland.
When we’re given a rate cut on this criminal scam it’s like Saturday night at the crossroads.
We should have offered to pay Germany’s war reparations while we’re at it.
Sarkozy’s banks are going to need bailing out by Christmas, but if people think that the French will pile their bank debt on top of the state debt like Lenihan and Cowen did, then they are mad. We are getting the sop above because France and Germany’s banks are going to need help. The approach will be very different for them and it will be just another example of a “Europe of Equals” – Jesus Wept!
As David Drumm says, “Let’s Party!”
That’s good news but will it have any effect on the austerity measures planned for Decembers budget?
“Every little helps” !! At least it’s going in the right direction. Time will tell. Eh – can we fly our flag at full mast now ??!!
I’m hoping it might give some further breathing space.
The December budget has to happen. These concessions are being granted on the basis that the austere measures continue.
Good news!!!
Now let’s start building loads of houses and shit we don’t need to counteract this positive progress.
Aye, I agree Liam – after all, we don’t have any ghost estates around the country just going to waste!
Sinn Féin and the ULA won’t know what to say after all this. First a billion saved, now another 600m per annum. Those loons wants us to go back to the markets now and forget about IMF/EU. Fools they are.
U can sing that David Higgins. Totally agree.
This is down to 2 of France’s largest banks being downgraded. Do you honestly think that when the French banks start to go to the wall that the debt will be heaped on to the state debt of France, not a hope. Watch them burn the bondholders, or else the ECB open up liquidity, and pay off the debts or turns them in to a Euro bond debt. The approach will be radically different, of that I have no doubt. We’ll still be told to keep our mess, be thrown a little tidbit like this and be walked all over again.
I would recommend you read the famous economist Milton Friedman’s writings on the Euro from 1997 and why it would end in failure. It is an eerily accurate layout of out the crisis.
Is that Tony Stamper referencing Friedman? Pigs might fly yet!
I like to read Libertarian economists sometimes, we all have our naughty pleasures, there is essential truths in all political positions, the problem comes in when people become dogmatic but in this regard he was stating the blatant facts. It was beyond an ideological interpretation. I know people, successful people, who never went to secondary, who were pointing out that having a single currency for Frankfurt and the south of Italy was economic unfeasible.
Next Euro referendum will be on splitting the EU in to differing groups or a house cleaning by Govt. to manage the affairs after the whole thing went bang.
Fair play Tony. You’re right about referencing a variety of views and where this mess appears to be going. Much of Mises writing (pre-Wall St. crash) appears particularly prophetic in our current crisis.
What to do with the money? Hospitals?
Can we invest in forestry? The Swedes (massive wood/ paper exporters) are envious of our climate in regards to tree growth. All those fields idle, where farmers are paid to NOT grow crops, could be a massive natural resource. Just sayin.
it takes up to 20 yrs to grow these non native tree’s which effect our eco systems … damaging bio diversity, acidifying soils and water ecosystems.
My only question is what do they want us to vote for next ??
About time too, Will mr Noonan Claim credit for this also, or will he pass on some of these savings to the already over burdened population of this poor proud and dignified nation, we have honoured our committments to the letter, its about time our efforts were recognised, show us we made the right decision electing this government, now is a time for actions not meaningless words and political hype, Alan
Give one shower of nasty, corrupt, evil-doers 15 years to ruin a global boom and you want overnight success from somebody only just in the door? No wonder the country is in a state when we’re more interested in party people and demand that the janitors have the place cleaned up by morning!
No fan of FG, but no one can turn it around that quick. The key problem remains, our last traitor Finance minister & Govt. hung this country with the debts of private banks, in order to protect their developer buddies on whom they depended for party funding, kickbacks and directorships after politics.
The principal amount of the borrowing still stands and is still probably going to be fatal to this country. Time to write down the debt, it is going to happen, that is a certainty. The EU approach to Greece has been similar, a refusal to do the right thing, until now we have talk of a Greek collapse being talked about as When, not if, and with many people presuming that the Euro will go with it.
This is good but it is not the main event.
you people who are bleeting that this is a great thing, wake up fools, this is not our debt, they have destroyed our country and will steal your childrens freedom and you bleet at imaginary crumbs , shame on you its a sad day for the Irish, FG are as big a traitors as FF, they are liars and fraudsters owned by the IMF and big banks they have been for a very long time!
Best comment on this thread – good stuff
+1
Isn’t Ireland glad now that it is a member of the EU?
Try borrowing that amount of money on the open market, firstly who would have given it and secondly if they did well, it would have been like borrowing from a money lender, loan shark with exhorbitant interest rates.
The austerity measures seems to be paying off which is good news for the country.
Mods, why was my comment pinged ????
Barry – it was part of a to-and-fro which included personal attacks, so we deleted the relevant portion of the thread.
Everything comes at a cost, and I believe we are going to pay for this somehow or another.
I presume they want something else from us; I do hope the Irish aren’t being duped into signing yet another treaty.
NEW EUROPEAN TREATY REFERENDUM COMING RIGHT UP!!! ….. Still though, it’s good news!!
If it does & we have to vote on it, it will be int’resting to see how Irl votes.
Ireland will vote yes, as always
Not this time, I imagine. The long grass has been growing.
Sure if we vote no they’ll come back again untill we vote yes.History repeats it self.
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