The EU Commissioner for Economic and Monetary Affairs has indicated his support for Ireland’s plan to repay part of its bailout loan early, according to Minister for Finance Michael Noonan.
The Government wants to repay €15bn of the International Monetary Fund’s €22bn contribution to the country’s 2010 bailout, which it is hoped would reduce costs to the Exchequer.
However the terms of the bailout mean that Ireland must repay all of its borrowings at the same pace, unless the parties involved agree to a different arrangement.
Mr Noonan is this week holding a series of meetings with senior European officials to gain support for the plan and described his discussions with EU Commissioner Jyrki Katainen today as “very constructive”.
He said the commissioner had “indicated that he was in principle very supportive” of the repayment plan and looked forward to further details following a comprehensive assessment.
If approved the Government would repay the IMF through new debt raised on the international markets, which would likely be borrowed at a significantly lower interest rate than the 5% the IMF currently charges.
Experts estimate the move could save the Government up to €400m per year.
This morning a senior EU source said that officials from the other eurozone member states were “uniformly positive” about the request
“The [EU] institutions are positive, it is good for the sovereign, for the stability of the [sovereign’s] financial portfolio, and good for us,” the official told reporters in Brussels.
Mr Noonan will tomorrow meet ECB president Mario Draghi, Eurogroup president Jeroen Dijsselbloem and European Stability Mechanism CEO Klaus Regling to discuss the matter.
The issue will also be discussed at a meeting of eurozone and EU finance ministers in Milan on Friday and Saturday.
The request will, however, require ratification by a handful of national parliaments or parliamentary committees, which could significantly delay the move.
Under the plan the IMF would remain part of Ireland’s post-programme surveillance system, alongside the European Commission and the ECB.
An EU official today suggested that if the Irish move was a success, then it was likely that Portugal would also apply for the facility.