Dáil Éireann Debate, Wednesday - 1 February 2012
71 Deputy Bernard J. Durkan asked the Minister for Finance the full extent of savings achieved to date in the context of debt repayment since the formation of the current Government, with particular reference to interest rate reduction or otherwise; and if he will make a statement on the matter. [5825/12]
Amharc ar fhreagraThe most significant saving that we have achieved on our debt dynamics results from the interest rate reduction on EU/IMF Programme funding announced following last July's Heads of State/Government meeting and the lengthening of maturities on Programme loans from an average duration of 7½ years to 12½ years in the case of EFSM and a minimum of 15 years in the case of EFSF. This lengthening of maturities in particular will be of assistance as it means there is less pressure on the State to borrow to refinance maturing debt in the short-to-medium term, giving the State valuable breathing space to continue with the process of returning the economy to health and sustainability to the public finances. Estimates provided by the National Treasury Management Agency (NTMA) show that the total savings on the EU facilities with an average life of 7½ years is some €9 billion. In addition, the estimated cost of IMF loans is expected to reduce as a result of increases in Ireland's IMF quota. The NTMA has estimated the overall benefit of this to be some €1.9 billion. For 2012, it is estimated that the combined interest rate margin reductions and IMF quota impact will reduce the interest bill by some €0.9 billion. In the case of the IMF loans, the estimated savings take account of a quota increase which will not come into effect before autumn 2012 at the earliest. These expected savings may change either upwards or downwards in the light of future quota revisions.
Furthermore, we have taken steps to lessen the impact of the supports to the banking system. Of the €24 billion in capital identified as being required for the Irish banking sector following the March 2011 PCAR process, the net Exchequer contribution was some €6.5 billion. A further €10 billion was provided from the National Pensions Reserve Fund (NPRF) with the balance of some €7.5 billion being sourced to date through burden sharing with subordinated bondholders, private investment, asset disposals and internal capital generation. The cost to the State was therefore significantly less than it might otherwise have been.
In this regard we will continue to take initiatives that will lessen the impact on the sovereign of debt resulting from the banking crisis.
