€10bn saved on national debt repayments

Current forecasts are likely to see close to €4bn in savings achieved during 2015, which will bring the total reduction in repayments over the €10bn mark.

Restructured repayment agreements with the IMF, EU, and ECB — including the deal on promissory notes and, more recently, the early repayments of IMF loans — have reduced the burden on the country over the past three-and-a-half years.

These savings represent improvements in the national debt repayments that will never have to be repaid, according to MEP Brian Hayes.

“In 2011, at the start of the troika programme, the Department of Finance estimated that national debt repayments would be €28.7bn for the years 2012, 2013, and 2014. The actual amount paid for these years was €22.29bn, accounting for savings of €6.4bn.

“At the start of the troika programme, the estimate of debt repayment for 2015 was €11.3bn and the latest forecast was €7.4bn, which will amount to another €3.9bn of savings,” Mr Hayes said.

“Having gone down the successful route of prudent negotiation, the situation is now much improved for taxpayers.”

Investec Ireland chief economist Philip O’Sullivan said the figures are likely to partly reflect the general improvement in bond yields driven by ECB policy.

However, he added that the renegotiations have undoubtedly helped reduce our borrowing costs as well.

“The debt reprofiling has saved an awful lot in near-term interest costs but I think that’s only part of the story. The fact that so much of [the repayments were] pushed back also really eased Ireland’s funding needs,” Mr O’Sullivan said.

“We had to pay an awful lot of money under the previous promissory note regime on an annual basis and that’s been pushed out with the last principal repayments with the bonds issued as part of the promissory note deal not repayable until 2053, which obviously, in real terms, will mean we will pay back a lot less because inflation will have eroded a lot of that.”

The promissory note deal struck in February 2013, which saw the notes replaced with a series of long-term bonds, helped reduce the debt burden associated with the IBRC, formerly Anglo Irish Bank.

Near-term interest rate reductions reduced financing needs which gave much-needed breathing space to the exchequer at the time, which, along with ECB policy, has helped push down Ireland’s cost of borrowing.

A more intangible benefit was also achieved as a result of the restructured agreements in the form of significant goodwill across European nations — which is in stark contrast to the current Greek situation, according to Mr O’Sullivan.

Greece’s 10-year bond yields yesterday stood at 11.1% while Ireland’s 10-year yield was 0.72%.

Fianna Fáil finance spokesman Michael McGrath yesterday claimed Mr Hayes was “stretching the truth”, adding that much of the debt has been pushed out to a later date.

No writedown on the cost of Anglo Irish Bank was achieved nor did the Government succeed in its aim of securing burden-sharing with senior Anglo bondholders, Mr McGrath added.

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