Repaying Ahead of Schedule: Ireland & IMF Loans

[BoyRacer]

Repaying Ahead of Schedule: Ireland & IMF Loans - -> trueeconomics.blogspot.co.uk/201 … edule.html

Last week Portugal’s Expresso published a big article on Irish plans to repay earlier the IMF loans. The link is here: fesete.pt/portal/docs/pdf/Revist … o_2014.pdf (pages 37-38)

My view on the subject in full:

1- The Irish hurry is politically engineered or they understand that the present low sovereign bond yields mood can be a short-term window of opportunity in the Euro area?

In my view, Irish Government interest in refinancing IMF loan is driven by both political and economic considerations. On political front, following heavy defeats in the European and Local elections, the ruling coalition needs to deliver new savings in Exchequer spending to allow for a reduction in austerity pressures in Budget 2015 and more crucially support increased giveaways in the Budgets in 2016 and 2017. Savings of few hundred millions of euros will help. And an ability to claim that the IMF loans have been repaid, even if only by borrowing elsewhere to fund these repayments can go well with the media and the voters tired of the Troika.

there is more

[Renting_And_Proud]

And an ability to claim that the IMF loans have been repaid, even if only by borrowing elsewhere to fund these repayments can go well with the media and the voters tired of the Troika

This is exactly how I see it

And the IMF seemed to actually want them to deliver on targets, whereas the EU/ECB didn’t seem as “hardcore”

[Eschatologist]

Date and numbers here:

ntma.ie/business-areas/fundi … programme/

I’ve no idea how the early repayment would be distributed amongst the various components.

[Renting_And_Proud]

Any idea how much this would actually save per annum on interest payments

[mr_anderson]

And an ability to claim that the IMF loans have been repaid, even if only by borrowing elsewhere to fund these repayments can go well with the media and the voters tired of the Troika

This is exactly how I see it

And the IMF seemed to actually want them to deliver on targets, whereas the EU/ECB didn’t seem as “hardcore”

It’s unfortunate that the public are not aware as to how incredulous the IMF were at the government’s decision not to burn the bondholders.

When such a basic move is avoided, you know that’s where the real VI’s lie.

[jasonking]

Any idea how much this would actually save per annum on interest payments

€375 million, or two Irish Waters, is the figure being quoted, every year

[corkfella]

i guess the game changer debt deal that they still deny will never happen is still happening…

How kind of our masters to let us save money on the bank interest on a 60B debt we should never have taken on in the 1st place.

[Schrodinger]

Lest we forget.
independent.ie/opinion/colum … 75068.html

If it does go ahead the minister - by all accounts - will be in line for a canonisation, with economist Stephen Kinsella writing in this newspaper yesterday that “he will have sealed his place in history”.

Which begs the question, has everybody lost their minds? Or is the country just suffering from a particularly acute case of amnesia.

If so, allow me to remind you of some painful facts and figures that no one in government is too eager to trumpet.

According to Eurostat, Ireland, which comprises less than 1 per cent of Europe’s population, shouldered 43 per cent of the net cost of the banking crisis across all 27 EU member states - €41bn out of €96.2bn.

As a percentage of GDP, that figure amounts to a staggering 25.8 per cent for Ireland. To put that into perspective, the next highest percentage is 3.3 per cent for Latvia.

It means that the cost of the bank bailout was €8,956 for every man, woman and child in Ireland, compared to an EU average of €191.

It gets worse. The €41bn figure cited by Eurostat doesn’t take into account the €20.7bn from the National Pension Reserve Fund that was used to bail out banks, because that figure wasn’t added to the national debt.

In total, about €64bn was shovelled into the bloated corpses of Irish banks, around 40 per cent of GDP.

[Schrodinger]

irishtimes.com/business/econ … -1.1925774

Ireland has won German backing to refinance part of its bailout loans, according to Minister for Public Expenditure Brendan Howlin.
…
He also said the European Central Bank was not putting pressure on Ireland to accelerate the sale of new bonds it pledged to issue in a deal struck with Frankfurt last year that reduced the burden of State-owned bank debts.

“All those we have talked to - Draghi, Dijsselbloem, Schaeuble and others - are on board. The Finnish parliament has endorsed it. The German parliament has set a date to ratify it. Nobody is against,” Mr Howlin said.

[bml]

Repaying Ahead of Schedule: Ireland & IMF Loans - -> trueeconomics.blogspot.co.uk/201 … edule.html

Last week Portugal’s Expresso published a big article on Irish plans to repay earlier the IMF loans. The link is here: fesete.pt/portal/docs/pdf/Revist … o_2014.pdf (pages 37-38)

My view on the subject in full:

1- The Irish hurry is politically engineered or they understand that the present low sovereign bond yields mood can be a short-term window of opportunity in the Euro area?

In my view, Irish Government interest in refinancing IMF loan is driven by both political and economic considerations. On political front, following heavy defeats in the European and Local elections, the ruling coalition needs to deliver new savings in Exchequer spending to allow for a reduction in austerity pressures in Budget 2015 and more crucially support increased giveaways in the Budgets in 2016 and 2017. Savings of few hundred millions of euros will help. And an ability to claim that the IMF loans have been repaid, even if only by borrowing elsewhere to fund these repayments can go well with the media and the voters tired of the Troika.

there is more

This reason the government is doing it is because it will save 400m annually on intrest payments. The rte.ie/news/business/2014/09 … st-budget/ view about political motivations is speculative.

[Mantissa]

This reason there doing it is because it will save 400m annually on intrest payments. The authors view about political motivations is speculative.

It will save 400m if Ireland can actually refinance these loans for a lower interest rate. That is not certain, although it is likely. It’s possible that the bond market may take a longer look at Ireland’s longterm prospects if we try and refinance this much.

[bml]

This reason there doing it is because it will save 400m annually on intrest payments. The authors view about political motivations is speculative.

It will save 400m if Ireland can actually refinance these loans for a lower interest rate. That is not certain, although it is likely. It’s possible that the bond market may take a longer look at Ireland’s longterm prospects if we try and refinance this much.

The current interest rate on a 10 year bond is 2%, they believe they can raise 18bn at roughly this rate by the end of the year and have the IMF paid back. This would reduce Ireland debt burden so bond markets might see Ireland bonds as even less riskier.

[Mantissa]

This reason there doing it is because it will save 400m annually on intrest payments. The authors view about political motivations is speculative.

It will save 400m if Ireland can actually refinance these loans for a lower interest rate. That is not certain, although it is likely. It’s possible that the bond market may take a longer look at Ireland’s longterm prospects if we try and refinance this much.

The current interest rate on a 10 year bond is 2%, they believe they can raise 18bn at roughly this rate by the end of the year and have the IMF paid back. This would reduce Ireland debt burden so bond markets might see Ireland bonds as even less riskier.

Yeah but the risk is moving from IMF/ECB/EC (who Ireland kinda has to pay back) to private bondholders (who could get burned in Bailout II). Of course, the ECB may be de facto underwriting this bond issue also through ESM. But we end up paying a bit more than expected for the 18bn.

[bml]

Just checked it, 10 year bond rate is at 1.75%. Paying IMF 5% on the 18bn. So unless the rate rises very sharply before the end of the year then they should do it.

[Mantissa]

Will definitely save a lot of money. But might not be quite what Noonan is claiming now.

[TheJackal]

Major Budget boost as IMF backs €300m loan bill deal

independent.ie/business/budg … 83794.html