Disbursement Schedules
The EU-IMF Programme of Financial support provides for €85 billion in overall support with the external element of this funding amounting to €67.5 billion up to the end of 2013. In relation to the schedule for the drawdown of the programme funding it is important to note that this will be continuously reviewed to take account of our requirements.
To date, a number of indicative schedules for drawing down this funding have been published in the staff reports of the EU Commission and the IMF. The most recent of these was that published by the EU Commission in February this year. These schedules are indicative, and are in the process of being updated to take account of later information. For example — the programme envisaged a provision of €35 billion for the banking sector support. Following the recent stress tests, the total requirement is now assessed at €24 billion in gross terms, with the net figure being somewhat lower as part of this is expected to be found from private capital raising and contributions from the subordinated bond holders. In that context the exact amount required to be drawn down for bank recapitalisation cannot be determined until these exercises have been completed. The precise requirements for exchequer funding will also become clear as the year progresses. The schedules for quarterly draw downs are therefore subject to variation.
The indicative data published by the European Commission in February 2011 included an illustrative drawdown schedule for the EU-IMF element of the programme (including bilateral loans). This is set out in table 1 below.
Table 1: Indicative draw down Profile — February 2011 (€ billion)
|
EU-IMF Loan Disbursement
|
Q1 2011
|
Q2 2011
|
Q32011
|
Q4 2011
|
Year 2011
|
Year 2012
|
Year 2013
|
Total
|
|
EU
|
11.7
|
8.4
|
3.9
|
4.6
|
28.6
|
13.1
|
3.3
|
45
|
|
IMF
|
5.9
|
4.2
|
1.9
|
2.3
|
14.3
|
6.6
|
1.6
|
22.5
|
|
Total
|
17.6
|
12.6
|
5.8
|
6.9
|
42.9
|
19.7
|
4.9
|
67.5
|
Source: EU European Economy Paper 76 February 2011: The Economic Adjustment Programme for Ireland.
As already noted, this schedule is indicative and assumes drawdown of the full amount of the funding available. The drawdown schedule was discussed during the recent review mission, which finished last week. It is now envisaged that the aggregate drawdown for this year will amount to €38.5 billion in 2011. It is currently envisaged that an amount of up to €19 billion may be drawn down in 2012 and on that basis the remaining €10 billion of external funding would be available for drawdown in 2013. The details of this proposed drawdown schedule are still being discussed by the NTMA with the EU, the ECB and the IMF. Once final agreement has been reached on the exact timing and the allocation of the external funds the revised indicative schedule will be published by my Department.
The amounts drawn down to date, and the interest rate applicable to these amounts, are set out in Table 2 below:
Table 2: Draw down of EU & IMF funds to date (April 2011)
|
Net Disbursement amount
|
Draw down Date
|
MaturityProfile
|
Interest Rate (Effective)
|
|
€billion
|
|
|
%
|
|
EFSM
|
4.973
|
12 Jan 2011
|
4 years 11 months
|
5.51
|
|
3.4
|
24 March 2011
|
7 years
|
6.206
|
|
IMF
|
5.836
|
18 Jan 2011
|
7½ years average life
|
1.92 SDR = 5.2*
|
|
EFSF
|
3.592**
|
1 Feb 2011
|
5 years 6 months
|
5.9
|
|
Total
|
17.801
|
|
|
5.62***
|
*The SDR rate on the IMF drawdown reflects the lower rate arising from our recent quota increase. It is lower than the overall indicative rate for this funding as it is the initial drawdown and accordingly a portion of the drawdown attracts a lower rate of interest as it is less than 3 times quota. An additional surcharge is added for any borrowing in excess of 3 times quota that is outstanding for more than three years. The 5.2% € rate shown is the estimated equivalent rate at current market rates and taking account of an expected future increase in Ireland's IMF quota when the full amount of the SDR floating rate funds available under the Programme is swapped into euro fixed rates.
**This is the net disbursement amount. The drawdown under the EFSF is €4.2 billion but some €600 million of this is applied to credit enhancement measures — leaving €3.592 billion available for the exchequer.
*** The effective interest rate on the total amount is calculated using the 5.2% Euro equivalent interest rate shown above for IMF funding.
Drawdown schedules for the bilateral loans:
UK
The disbursement schedule for the UK bilateral loans is as follows:
Table 3: UK loan disbursement profile
|
Review (IMF)
|
Amount
|
|
Q3 2011
|
£403,370,000
|
|
Q4 2011
|
£403,370,000
|
|
Q1 2012
|
£403,370,000
|
|
Q2 2012
|
£403,370,000
|
|
Q3 2012
|
£403,370,000
|
|
Q4 2012
|
£403,370,000
|
|
Q1 2013
|
£403,370,000
|
|
Q2 2013
|
£403,370,000
|
Denmark and Sweden
Discussion of the Danish and Swedish loan agreements is continuing and both the proposed drawdown schedules and the interest rate to be charged on the loans will form part of that discussion.
Interest Rates:
The average (blended) interest rate on the €67.5 billion available to be drawn from these three external sources was estimated to be 5.82 per cent on the basis of market rates at the time of the agreement. The actual cost will depend on the prevailing market rates at the time of each drawdown and could be higher if market rates have deteriorated. The average life of the borrowings, which will involve a combination of longer and shorter dated maturities, under each of these sources is 7.5 years.
The interest on Ireland's borrowing from EFSM is based on the cost to EFSM of raising funds in the markets plus a margin of 2.925%. In the case of EFSF the cost of funds for Ireland is based on the cost to EFSF of raising funds in the markets plus a margin of 2.47%, plus the cost of credit enhancement features which can vary over time but amounted to 0.54% on the loan drawn down from EFSF on 1 February 2011. Discussions are under way with a view to achieving a 1 per cent reduction in the cost of Ireland's borrowing from EU sources.
With respect to borrowings from the IMF, based on current market conditions, the NTMA has estimated an effective average annual cost of around 5.20%, taking into account quota revisions and the cost of hedging and assuming drawdown of the full €22.5 billion available from the IMF. The interest rate for the UK loan will be the 7.5 year sterling swap rate plus a margin of 2.29%.
The interest rate to be paid in each year:
The amount of interest to be paid on these loans each year will be determined by the actual amounts drawn down and these amounts are still under discussion.
