I propose to take Questions Nos. 208, 209 and 214 together.
The Government has made significant progress in reducing the burden of the EU/IMF programme loans. This is delivering real and tangible savings.
These savings can be broken down into two elements, cash savings and a reduction in our borrowing requirement over a period of time.
In July 2011, the Euro Area Heads of State or Government (HOSG) agreed to reduce the cost of the European Financial Stability Facility (EFSF) loans, and similar reductions were subsequently agreed for the interest rates on the loans provided by the European Financial Stabilisation Mechanism (EFSM) and also by the three bilateral lenders (UK, Sweden and Denmark). It is estimated that the interest rate reductions on the EU funding mechanisms and the bilateral loans are worth of the order of €9 billion over the initially envisaged 7 ½ year term of these loans.
The reduction in interest rates on our EU and bilateral programme loans in 2011, and more recently the early repayment of the IMF loans, mean that we have negotiated real cash savings to the exchequer of circa €10 billion.
Also in 2011, the average maturity of the EFSM and the EFSF loans was extended to 12.5 and 15 years respectively.
In 2013, EU Finance Ministers agreed in principle to further extend the maximum weighted average maturities on our EFSF and EFSM loans by up to 7 years, over and above the extension agreed in 2011. This further maturity extension removes a refinancing requirement of some €20 billion for the Irish State in the years 2015 to 2022. This extension of maturities has a number of significant benefits for Ireland, including smoothing our redemption profile, improving long term debt sustainability and it also has a positive impact on the cost of Exchequer borrowing through creating further downward pressure on our borrowing costs.
In February 2013, the Irish Government replaced the Promissory Notes issued to IBRC with a series of longer term, non-amortising floating rate Government bonds. The restructuring of the IBRC promissory note has reduced the overall borrowing requirement for the State by €20 billion over the next ten years. Under the previous arrangements, the State was required to borrow €3.1 billion annually in order to meet the required cash payments on IBRC's Promissory Notes. As part of the arrangement the Central Bank acquired €25bn of Floating Rate Bonds and €3.46bn of 5.4% Treasury Bond maturing in 2025 in replacement of the Promissory Notes. Following this exchange the State no longer has to borrow to fund these annual cash payments in the coming years.
The extension of maturities and the promissory note arrangement reduces the State's borrowing requirement by over €40 billion over the next decade, thus significantly improving the viability of the State's finances.
These measures, and the interest rate reductions, have significantly improved the sustainability of our debt. The success of these efforts is apparent in the strongly improving economy and the record low bond yields currently being offered for Irish Government debt.