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NTMA statement on proposal to seek lender agreement on early repayment of IMF loans and other facilities totalling approx. €5.5bn

7 September 2017 – Today the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, has announced that Ireland intends to repay its remaining loans from the IMF (approx. €4.5bn), together with bilateral facilities agreed with Sweden (€0.6bn) and Denmark (€0.4bn), a total of circa €5.5bn.

The NTMA estimates that interest savings for the Exchequer from the early repayment of these loans could be of the order of €150m over the remaining lifetime of the loans.

Any replacement of programme loans with marketable debt also increases the ECB’s purchase capacity for Irish government bonds. In addition there are secondary market liquidity and operational benefits.

From a funding perspective there is no immediate effect as the proposal is at request stage. Early repayment of the loans requires agreement from our European lenders to waive the proportionate early repayment clauses in our respective loan agreements.

Comment by NTMA Director of Funding & Debt Management, Frank O’Connor:

“Replacing Ireland’s loans from the IMF, Sweden and Denmark further reduces our debt service costs, which have declined considerably in recent years.

This is not the first time Ireland has made an early repayment of programme loans. The NTMA has previously implemented arrangements to repay over €18bn in IMF facilities to take advantage of reduced market borrowing costs and create savings for the Exchequer.

The Exchequer is in a healthy funding position. At end-August we had €20bn in cash and liquid assets.”

As previously advised to the market, the NTMA’s next bond auction is scheduled for Thursday 14th September. Further details of this auction will be published on Monday 11th September.

The NTMA will publish details of its Q4 funding schedule on Monday 2nd October.

Notes to Editors:

  • At end-August 2017, the residual weighted average maturity (WAM) of the IMF loan was 4.3 years while the residual WAM of the Swedish and Danish bilateral loans was 3 years.
  •  The table below shows the annual maturity profile of the IMF, Swedish and Danish bilateral loans. The next IMF repayment was scheduled for January 2021. The first scheduled repayments of the Swedish and Danish bilateral loans were in December 2019 and September 2019 respectively.
€bn 2019 2020 2021 2022 2023 TOTAL
IMF* 2.81 1.28 0.42 4.51
Sweden 0.15 0.30 0.15 0.60
Denmark 0.10 0.20 0.10 0.40
TOTAL 0.25 0.50 3.06 1.28 0.42 5.51

Rounding may affect totals

*Outstanding liability to the IMF is SDR3.77bn (€4.51bn at end-August FX rate: €1 = SDR 0.84)

  • Under the EU-IMF Programme of Financial Assistance for Ireland agreed in late 2010, external support amounting to €67.5bn was provided from the IMF, the European Financial Stabilisation Mechanism (EFSM), the European Financial Stability Facility (EFSF) and bilateral loans from the UK, Sweden and Denmark.
  • In total just over €18bn (c. 81% of the original loan) was repaid to the IMF early between December 2014 and March 2015.
  • With this further repayment, the IMF loan will be fully repaid, as will the bilateral loans from Sweden and Denmark. As a result the outstanding Programme loan balance will drop to below €45bn.