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Irish Government Statement On EU - IMF Programme for Ireland: Interest Rate To Be 5.8%
Announcement of joint EU - IMF Programme for Ireland - Irish Gov Statement
The Government today agreed in principle to the provision of €85 billion
of financial support to Ireland by Member States of the European Union
through the European Financial Stability Fund (EFSF) and the European
Financial Stability Mechanism; bilateral loans from the UK, Sweden and
Denmark; and the International Monetary Fund’s (IMF) Extended Fund
Facility (EFF) on the basis of specified conditions.
The State’s contribution to the €85 billion facility will be €17½
billion, which will come from the National Pension Reserve Fund (NPRF)
and other domestic cash resources. This means that the extent of the
external assistance will be reduced to €67½ billion.
The purpose of the external financial support is to return our economy
to sustainable growth and to ensure that we have a properly functioning
healthy banking system.
The external support will be broken down as follows: €22½ billion from
the European Financial Stability Mechanism (EFSM); €22½ billion from the
International Monetary Fund (IMF); and €22½ billion from the European
Financial Stability Fund (EFSF) and bilateral loans. The bilateral
loans will be subject to the same conditionality as provided by the
programme.
The facility will include up to €35 billion to support the banking
system; €10 billion for the immediate recapitalisation and the remaining
€25 billion will be provided on a contingency basis. Up to €50 billion
to cover the financing of the State. The funds in the facility will be
drawn down as necessary, although the amount will depend on the capital
requirements of the financial system and NTMA bond issuances during the
programme period.
If drawn down in total today, the combined annual average interest rate
would be of the order of 5.8% per annum. The rate will vary according
to the timing of the drawdown and market conditions.
The assistance of our EU partners and the IMF has been required because
of the present high yields on Irish bonds, which have curtailed the
State’s ability to borrow. Without this external support, the State
would not be able to raise the funds required to pay for key public
services for our citizens and to provide a functioning banking system to
support economic activity. This support is also needed to safeguard
financial stability in the euro area and the EU as a whole.
Programme for Support
The Programme for Support has been agreed with the EU Commission and the
International Monetary Fund, in liaison with the European Central Bank.
The Programme builds on the bank rescue policies that have been
implemented by the Irish Government over the past two and a half years
and on the recently announced National Recovery Plan. Details of the
measures are set out in the accompanying Notes for Editors.
The Programme lays out a detailed timetable for the implementation of the measures contained in the National Recovery Plan.
The conditions governing the Programme will be set out in the Memorandum
of Understanding and the Government will work closely with the various
bodies to ensure that these conditions are met. The funding will be
provided in quarterly tranches on the achievement of agreed quarterly
targets.
The Programme has two parts – the first part deals with bank
restructuring and reorganisation and the second part deals with fiscal
policy and structural reform. The requirement for quarterly progress
reports covers both parts of the programme. When the documentation on
the Programme is finalised, it will be laid before the Houses of the
Oireachtas.
Bank Restructuring and Reorganisation
The Programme for the Recovery of the Banking System will be an
intensification of the measures already adopted by the Government. The
programme provides for a fundamental downsizing and reorganisation of
the banking sector so it is proportionate to the size of the economy.
It will be capitalised to the highest international standards, and in a
position to return to normal market sources of funding.
Fiscal Policy and Structural Reform
The Ecofin has acknowledged the EU Commission’s analysis that a further
year may be required to achieve the 3% deficit target. This analysis
is based on a more cautious growth outlook in 2011 and 2012 and the need
to service the cost of additional bank recapitalisations envisaged
under the programme. The Council has today extended the time frame by 1
year to 2015.
The Programme endorses the Irish Government’s budgetary adjustment Plan
of €15 billion over the next four years, and the commitment for a
substantial €6 billion frontloading of this plan in 2011. The details
of the Programme closely reflects the key objectives set out in the
National Recovery Plan published last week. The adjustment will be made
up of €10 billion in expenditure savings and €5 billion in taxes.
The Programme endorses the structural reforms contained in the Plan
which will underpin a return to sustainable economic growth over the
coming years.
The Government welcomes the support shown to Ireland by our Eurozone
partners and in particular by the United Kingdom, Sweden and Denmark who
have expressed their willingness to offer bilateral assistance. The
Government also welcomes the assistance of the IMF.
As part of the Programme, Ireland will discontinue its financial
assistance to the Loan Facility to Greece. This commitment would have
amounted to approximately €1 billion up to the period to mid-2013.
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I wonder what the reaction is on the ground in Ireland...
Love how Trichet just confirmed these new facilities and extended loans are all consistent 'within the outlines' of the IMF (and ECB?) regulations.
What if the Irish don't want the bailout?
Is that a rethorical or academical question ?
Of course they don't want the bailout, but it seems they're having a harder time than Iceland to 'just saying no'...
Maybe not so difficult to vote No once the details of the 20% coming from NPRF at a zero interest rate get headlined.
I meant this as a joke, no1 is going to ask them, they let them vote 2ce for the EU constitution till they go it 'right' same here
I think he was using that as justification for bondholder haircuts in summer 2013.
Which of course just raises the question of why they weren't good enough for Greek sov. bondholders this year.
More corporate welfare programs for failed bankers and their politician friends courtesy in part from pensions saved out of the real economy.
German bankers with over 114 billion Euro exposure to Ireland are wiping some sweat off the brow. Until they can workout a bailout for their 150 billion Euro exposure to Spain (Source, der Spiegel)
5.8% on money they are printing at 0%, Such a deal for the Irish. Geeze since American Banks can get it for .25% from the back window of the FED, you would think they would bail out Ireland instead of the IMF and charge a mere 3.9%? And if Ireland defaulted, I'm sure they would get bailed out.
their pensions are being looted to bail out the bankers....
they should be rioting in the streets
what do you bet that their bankers have the balls to give themselves bonuses for "settling this" and "saving their economy"....
The programme provides for a fundamental downsizing and reorganisation of the banking sector so it is proportionate to the size of the economy.
We could certainly do with some of that medicine Timmah!
Ireland, please grow some balls and make my heritage proud. Default on the god dam debt. Bank bondholders and sovereign bondholders are NOT special - repeat after me - they are NOT special. Default for the sake of the people. Follow the actions of Iceland on the road to national sovereignty.
Iceland is No Ireland
Inquiring Irish minds just might be interested to see how Iceland fared after they told EU bankers to go to hell. For the answer, please consider Iceland Is No Ireland as State Kept Free of Bank Debt
This is a test run for the 'kwa.
People should RUN, not walk, to cash in their 401ks and buy PMs if they have not done so already.
May you live in interesting times is a curse, really.
Just in case no one has figured it out, they paid points on the mortgage to drop the interest rate. The pension plan gutting lowered them to under 6%.
Geeez, this is getting so confusing. I wonder if there is anyone who really has an idea WTSHF? Looks like the smaller European countries being used as expendable sorties to be slaughtered in the financial melee. just like Custer ordered a small squad of his calvary to harass the Indians in the Medicine Trail Coulee at the start of the battle, only to meet up against the entire Indian Camp.
But the probe didn't help Custer one bit, as after Indians got done with that squad, they rode up the Little Big Horn and slaughtered the rest.
Meanwhile, concerned about having to report all sales of PM over $600 starting next year. You'd think this would cause a spike in PM prices/purchases, followed by a (slight?)) drop early next year until reality rears its ugly head.
So I said WTF and just bought $10K of Ag Maples. At least Max Keiser willbe happy...also APMEX..the premium over spot is sobering. More Makers Mark, That's the only good thing that came out of KY, maybe except for Rand Paul? Certainly not my ex-bitch!
You didn't expect them to do nothing, did you? Its their deeds that will be their undoing.
I can see the signs at the next Irish protest:
"What no lube!?!?!?"
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...It will be capitalised to the highest international standards, and in a position to return to normal market sources of funding.
highest standards???? normal??? A little vague to say the least
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Iceland’s President Olafur R. Grimsson said his country is better off than Ireland thanks to the government’s decision to allow the banks to fail two years ago and because the krona could be devalued.
“How far can we ask ordinary people -- farmers and fishermen and teachers and doctors and nurses -- to shoulder the responsibility of failed private banks,” said Grimsson. “That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”
IMHO.... President Grimmson is the "Stand Up" dude of the year !!!
No wonder the IMF throatf**ked Ireland. The had to, before anyone thought about how relatively well Iceland is doing for NOT bailing out the banks. Go Iceland!