Ireland has borrowed €22.5 billion from the IMF in 12 tranches and these will be amortised (paid back in instalments) in varying amounts from July 2015 to December 2023 when the final payment on the last tranche drawn down will be made. The requirement for mandatory proportional early repayments in the event that IMF loans were to be repaid early, to which I referred in my reply to PQ 214 of 28 January 2014, arises from the provisions of the respective loan agreements and financial assistance facility agreements with the EFSF, EFSM, United Kingdom, Kingdom of Sweden and Kingdom of Denmark
In the case of the EFSF loans, the provision is included in the Loan Facility Agreement and Financial Assistance Facility Agreements covering these loans. The provision in the Master Financial Assistance Facility dated 30 March 2012 is as follows:
"Section 7.2
If financing granted to the Beneficiary Member State under the IMF Arrangement or the EFSM Loan Facility Agreement, any of the facilities provided by the Financial Support Providers, the IMF, the European Union (or any body or institution thereof) or any of the facilities described in Preamble (4), (5), (6) or (7) to this Agreement is repaid by the Beneficiary Member State in advance in whole or in part on a voluntary or mandatory basis, a proportional amount of the Financial Assistance Amounts of the Financial Assistance provided under this Agreement together with accrued interest and all other amounts due in respect thereof shall become immediately due and repayable in a proportionate amount."
For the EFSM loans the reference is in Section 7.3 of the Loan Facility Agreement dated 16 December 2010 (as subsequently amended):
"If financing granted to the Borrower under the IMF Arrangement or the EFSF Loan Agreement or under any of the Financial Support Provider Loan Agreements is repaid in advance in whole or in part on a voluntary or mandatory basis, a proportional amount of the Loan disbursed under this Agreement shall become immediately due and repayable in a proportionate amount established by reference to the proportion which the principal sum repaid in advance in respect of the relevant facility represents to the aggregate principal amount outstanding in respect of such facility immediately prior to such repayment in advance. For the avoidance of doubt, this provision shall not apply to any repayment under the EFSF Loan Agreement to finance the creation of the loan specific cash buffer.
The Borrower shall reimburse all costs, expenses, fees and loss of interest incurred and payable by the Lender as a consequence of an early repayment of any Tranche under this Clause."
The relevant reference for the bilateral loan from the United Kingdom can be found at Section 7.1 (b) of the Amended and Restated Loan Agreement of 4th October 2012:
"If the Borrower makes a prepayment under a Support Facility, the Borrower must prepay the Loans in a pro rata amount."
In the case of the Kingdom of Denmark the reference is at Section 7.1.2 of the Loan Agreement dated March 21 2012:
"If the Borrower makes a prepayment under a Support Facility, the Borrower must prepay the Loans in a pro rata amount."
Similarly, for the Kingdom of Sweden the reference is at Section 7.1.2 of the Loan Agreement dated 11th May 2012:
"If the Borrower makes a prepayment under a Support Facility, the Borrower must prepay the Loans in a pro rata amount."
I would note that the Loan Agreements with Sweden and Denmark have been laid before the Houses of the Oireachtas on 28 March 2012 and 30 April 2012 respectively, while that with the UK is available at: https://www.gov.uk/government/publications/bilateral-loan-to-ireland. In addition, the draft Master Financial Assistance Facility Agreement with the EFSF was laid before both Houses on 28 March 2012.
As I said in my reply to PQ 214 of 28 January 2014:
"The question of early repayment of any one lender cannot therefore be treated in isolation from other lenders and market expectations for when programme loans are due to be repaid." I should also point out that, as the IMF loans have a shorter average maturity, they will be repaid considerably in advance of the EFSF and EFSM loans for which we negotiated maturity extensions.
It should be noted that the matter of replacing IMF monies with market funding and the impact this might have on our bond yields would need to be carefully considered were such a possibility to arise. Such early repayment of our IMF loans does not arise at the moment but we will keep it under review. Should that possibility arise, I would take the advice of the NTMA. If such a proposal were to be pursued, the agreement of the other lenders would of course be required.
