Loans deal slashes cost of bailout
Ireland has cut the cost of its crippling bailout loans by 1.1 billion euro after Europe offered to lend some of the money at cost price.
Finance Minister Michael Noonan said the saving is further evidence that the Government is delivering on commitments to get a more credible deal on the rescue package.
In the first day back in the Dail since the summer break, Taoiseach Enda Kenny said the reduced costs are "of genuine benefit to the country".
The European Commission revealed a special fund being tapped for 22.5 billion euro is slashing top-up interest charges and offering the money at the same price it paid to borrow. That gesture will save about 650 million euro a year on paper.
The saving is on top of an interest rate cut of about 2%, yet to be finalised, on another swathe of the 85 billion euro package backed by euro-zone states.
Mr Noonan signalled the combined cuts in borrowing from the European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF) could total 1.1 billion euro.
However, the final charges are likely to change depending on whether all of the bailout is drawn down, how long it takes Ireland to repay and what rates are charged for borrowing individual tranches of the package.
The same deal offering cost price loans from Europe under the EFSM has been given to Portugal. Under the new arrangement, Ireland has also been given up to 30 years to repay these debts to the EFSM.
The cost-price deal will also be applied to the entire EFSM package, including the three tranches of loans already paid - five billion euro (£4.3 billion) in January, 3.4 billion euro (£2.9 billion) in March, and three billion euro (£2.6 billion) in May.
The Commission said: "In addition to the substantial cash savings for Ireland and Portugal, the new financial terms will bring benefits such as enhanced sustainability and improved liquidity outlooks. Moreover, indirect confidence effects through the enhanced credibility of programme implementation should result in improved borrowing conditions for the sovereign as well as the private sector."