Ireland Moves to Repay IMF Bailout Loans Early

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Wall Street Journal
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Ireland Moves to Repay IMF Bailout Loans Early

BRUSSELS—Ireland is moving to repay the majority of bailout loans it received from the International Monetary Fund early to take advantage of a drop in interest rates.

Following a meeting with the European Union's Economic-Affairs Commissioner Jyrki Katainen on Monday, Irish Finance Minister Michael Noonan was optimistic that EU governments would give their permission for the early repayment to the IMF.

"There's no sign of division," Mr. Noonan said. Earlier Monday, a senior EU official also said that the initial reaction from EU governments and institutions was positive.

The Irish government said early repayment to the IMF could save it as much as €375 million ($483.6 million) a year, or between €20 million and €25 million for every billion euros it borrowed from the IMF. Ireland currently pays almost 5% in interest on its loans from the IMF, while it can easily get money from financial markets at similar maturities at less than 2%, Mr. Noonan said Monday.

Ireland received a €67.5 billion bailout from the EU and the IMF in November 2010, when a banking crisis pushed it to the brink of bankruptcy. The IMF supplied €22.45 billion of the total rescue and Mr. Noonan said he hoped to repay as much as €18 billion early.

Under the current schedule, Ireland would need to repay its IMF loans between next year and 2023, while the European loans run until 2033 and at much lower interest rates. The IMF has already said it would agree to getting some of its money back early. However, any changes to the repayment schedule for one creditor need approval from the other creditors, since it could affect their chances of getting their money back. In some countries, including Germany, they would also need parliamentary approval.

Mr. Noonan said that the savings from interest payments would improve Ireland's debt sustainability and didn't pose any danger to EU loans.