Taxpayers to benefit from loan deal, Noonan indicates

Savings made by early repayment of IMF borrowings likely to be passed on in budget

European Central Bank president Mario Draghi (left) and Finnish outgoing prime minister Jyrki Katainen at  a press conference at the euro-group finance ministers’ meeting in Milan yesterday.  Photograph: EPA/Matteo Bazzi

European Central Bank president Mario Draghi (left) and Finnish outgoing prime minister Jyrki Katainen at a press conference at the euro-group finance ministers’ meeting in Milan yesterday. Photograph: EPA/Matteo Bazzi

 

Irish taxpayers are likely to benefit in next month’s budget from predicted savings under the deal to repay International Monetary Fund (IMF) borrowings early, Minister for Finance Michael Noonan suggested yesterday, as he secured political backing from euro-zone finance ministers for the Government’s loan restructuring plan.

“It will have some effect on the Irish budget. We will probably include a prudent and modest figure for additional savings in the NTMA in the budget figures,” Mr Noonan told reporters after the meeting, though he stressed that it depended on the National Treasury Management Agency’s timetable for issuing the first tranche of bonds.

The Minister will today seek support of finance ministers from all EU states for the plan, having secured the support of the euro group today.

“The most significant way of putting it is that we’ve cleared the first hurdle,” the Minister said after winning the unanimous backing of ministers.

Promissory note deal

Mario Draghi

He said the ECB had taken note of the loan restructuring proposal, but there was a “separate discussion on how to handle the legacy of the IBRC in a way that shouldn’t rise monetary financing concerns on our side”.

Mr Noonan said he expects the Central Bank governor Patrick Honohan to discuss the promissory note issue with ECB officials and Mr Draghi over the next few months, noting that Ireland had already accelerated the profile of some sales.

Frankfurt is unhappy with the pace at which Ireland has disposed of the long-term bonds that replaced the Anglo Irish promissory notes as part of that deal last year.

If agreed by the Ecofin group tomorrow, Ireland’s proposed IMF repayment deal will come before the German parliament on October 10th.

Mr Noonan said today that German finance minister Wolfgang Schäuble was supportive of the deal.

Another complicating factor is that Sweden holds a general election on Sunday that could delay the ratification process there.

The Minister will discuss the IMF repayment proposal with the finance ministers of Sweden, Denmark and Britain at tomorrow’s EU finance ministers meeting. The three member states contributed bilateral loans to Ireland’s 2010 bailout.

Market conditions

Speaking following the eurogroup today, Klaus Regling, head of the ESM fund which manages Ireland’s EFSF loans welcomed the eurogroup’s decision, pointing out that early repayment of the IMF loans would strengthen Ireland’s debt sustainability and benefit other large creditors like the EFSF.