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Govt to use cash to pay E18bn IMF loan

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Govt to use cash to pay E18bn IMF loan

Monday, September 15 15:56:54

The Government will likely use cash reserves to repay some of around E18 billion of loans to the International Monetary Fund in a bid to cut its interest bill, Minister Brendan Howlin said today.

The Government has received support from the International Monetary Fund and euro zone partners about a plan to repay the loans, which have higher interest rates than other parts of an international bailout it received in the wake of a 2010 banking and economic crisis.

Mr Howlin said the government expected to issue debt to the markets before the end of the year to repay some of the IMF debt, but that some of it may be paid off from cash balances built up as a buffer during the country’s financial crisis.

The country had E18.5 billion of cash at the start of the year.

“We have a very large cash reserve… So certainly some of that cash would be used to retire debt in whatever form is most effective,” Howlin told Reuters on the sidelines of a Labour party conference.

“Whether it is simply used to pay back IMF money or another purpose. That is a matter for the minister for finance,” the minister added.

The head of the country’s debt agency said in July that Ireland was considering holding lower cash balances to cover their funding for 9-12 months as opposed to the 12 to 15 months worth it has held for the last two years.

Irish bond yields saw some early weakness on Monday as analysts anticipated the increase in borrowings from the market in the coming year to replace the IMF loans.

Howlin said that Dublin could reduce its budget deficit to “possibly a little less” than 4 percent this year. Finance Minister Michael Noonan said earlier this month that a sharp increase in the government’s tax take so far this year would cut the deficit to a better-than-expected 4 percent.

For more visit www.businessworld.ie.

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Govt to use cash to pay E18bn IMF loan

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