Dáil Éireann Debate, Wednesday - 30 January 2013
73. Deputy Michael McGrath asked the Minister for Finance if he will provide details of his assertion that the extension of loan maturities in respect of Ireland's borrowings drawn down from the EFSF and EFSM could save the country billions of euro; if he will specify the assumptions underpinning this calculation; and if he will make a statement on the matter. [4720/13]
Amharc ar fhreagraAt the meetings of Eurogroup and ECOFIN Finance Ministers on 21 and 22 January 2013, respectively, it was agreed that the requests by Portugal and Ireland for an extension of maturities would be considered by senior officials and would then come back to Finance Ministers for further consideration. In my comments to the media following these meetings I made the point that it would be premature to quote any precise figures for possible savings as the details remain to be worked out, but I noted that this proposal could yield significant savings over time which could be in billions rather than in hundreds of millions of euro.
As the issue is still under discussion, the details of any extension agreed are not yet known. The views of all Euro Area and EU Member States, along with those of the EFSF and EFSM, will need to be taken into account. The savings arising will depend on a number of factors – the amount of loans for which a maturity extension is agreed, the length of any maturity extension, and the assumption made about the extent to which the EFSF and EFSM borrowings are cheaper than borrowings by Ireland. As I have already outlined, the level of loans and the length of the maturity remain to be agreed, while the assumption of the interest rate differential is ultimately a matter of judgement. There is a broad range of possible scenarios in that regard. It is worth noting that at present the differential between 10 year Irish and EFSF and EFSM borrowing costs would be about 2.5%. I would stress, however, that any scenarios are highly tentative and sensitive to the assumptions concerning the amount of loans covered, the maturity extension granted and the interest differential applied.
