The Government will repay €9 billion of the State's outstanding loan with the International Monetary Fund (IMF) next month, Minister for Finance Michael Noonan has confirmed.
The first instalment of the early repayment of our bailout funds from the Washington DC-based body will reduce the State's interest bill by €750 million over the lifetime of the loans, Mr Noonan said.
Ireland intends to repay €18.3 billion of our €22.5 billion IMF loan, which dates back to the financial assistance programme agreed with the fund and the EU in late 2010.
The National Treasury Management Agency (NTMA) has been selling Irish debt at low interest rates to fund the early repayment of IMF debts.
“By reducing the interest bill on the national debt we reduce the amount of tax revenues and borrowing that go towards financing the debt,” Mr Noonan said.
“This frees up resources for investment in activities that will grow the economy, create jobs and opportunities. This has knock on benefits across the economy and can lower the cost of debt for businesses and families.”
The Government will inform the IMF its intention to repay the first tranche repayment of approximately €9 billion on Monday next.
To facilitate an orderly settlement, the repayment will occur on two separate dates in December.
“It is essential that we improve our debt sustainability in order to break the boom and bust cycle of the past and the lowering of our debt servicing costs is a significant part of achieving this,” Mr Noonan said.
“Our EU and bilateral lenders have been very supportive of the government’s objective of improving Ireland’s debt sustainability since I discussed this issue with them in early September,” he added.
Separately, Mr Noonan said the Universal Social Charge is here for the “foreseeable future”.
Speaking on Newstalk's Pat Kenny show, he said Ireland cannot afford to give up the charge, which brings in over €4.5 billion a year.
“I believe everyone at work should pay something and I believe low paid people should retain most of what they earn….This year, I took another 80,000 people out of USC,” he said.
