There is no automatic linkage between ECB interest rate changes and the interest rates charged by the EU and the IMF on their various loans to Ireland. In the case of the IMF, the Special Drawing Rights (SDR) interest rate is somewhat influenced by a European 3-month collateralised lending rate, EUREPO, which is correlated, but not linked, to the ECB interest rate. The other elements of the IMF's SDR interest rate are the returns on 3-month U.S. Treasury Bills, three-month U.K. Treasury Bills and three-month Japanese Treasury Discount Bills. However, this SDR interest rate is a minor component of the overall cost and most of the IMF interest rate to Ireland is made up of surcharges. The NTMA has converted the interest rate liabilities to the IMF to fixed rate euro borrowings thereby averting any minor influence that ECB interest rate changes may have on the IMF interest rate for borrowings already entered into. In the case of new borrowings, the level of short term interest rates is one of a number of factors influencing the level of long term interest rates and through this the cost of borrowing.
In the case of the EFSF and EFSM, the interest rates charged to Ireland on existing borrowings are fixed and, therefore, not directly influenced by ECB interest rate changes — any influence is indirect. With respect to their future lending to Ireland, it is not possible to say to what extent ECB interest rate changes will have a bearing.
Information on the existing disbursements to Ireland, including interest rates, is set out in the following table. These interest rates will not be affected by ECB interest rate change of 7 April 2011.
|
Loan amount
|
Disbursement Amount
|
Draw down Date
|
Maturity from date of receipt
|
Interest Rate
|
Interest Rate including all costs & Credit Enhancements
|
European Financial
|
€5.00 billion
|
€4.973 billion
|
12-Jan-11
|
4 years 11 months
|
5.51%
|
5.54%
|
Stability Mechanism
|
€3.40 billion
|
€3.39 billion
|
24-Mar-11
|
7 years
|
6.18%
|
6.21%
|
(EFSM)
|
€3.00 billion
|
€2.986 billion
|
31-May-11
|
10 years
|
6.46%
|
6.48%
|
IMF
|
€5.84 billion
|
€5.84 billion
|
18-Jan-11
|
7½ years average life
|
|
2.345% SDR = € 4.77%1
|
|
€1.58 billion
|
€1.58 billion
|
18-May-11
|
7½ years average life
|
2.345% SDR = € 4.77%1
|
|
European Financial Stability Fund (EFSF)
|
€4.20 billion2
|
€3.592 billion
|
01-Feb-11
|
5 years 6 months
|
5.22%
|
5.90%
|
Overall Total
|
€23.02 billion3
|
€22.36 billion4
|
|
6.83 years; weighted average life
|
|
5.58%
|
1 The current SDR floating rate (2.345%) on the IMF drawdown reflects the lower rate arising from a quota increase for Ireland on 4th March 2011. The estimated Euro Equivalent rate on credit outstanding is 4.77% (pricing 31st May 2010) after hedging.
2 This is the loan amount. The net disbursement, the amount made available to the Exchequer, from the EFSF is €3.592 billion after credit enhancement measures.
3 Taking account of €600 million in credit enhancement measures in the EFSF funding and issuance Price by the EFSM and EFSF, the total cash received amount is €22.357 billion.
4 This is the overall Net Disbursement Amount received by the Exchequer.