Some of you might have thought that we would never again see the €300m we gave to Greece at the start of 2010 when we were feeling flaithulach, before the rude awakening with our own bailout in November 2010 when our contributions to Greece were suspended. But it seems we might see some or all of it, even if it will be later than originally planned.
In May 2010, Greece became the first EuroZone country to be given a bailout. The first Greek bailout was done on the nod before the establishment of the formal bailout funds, and we were originally going to contribute €1.3bn but by November 2010 when we sought our own bailout, we had only contributed €345.7m and our additional commitments were suspended. The original plan was that Greece would start repaying the principal from 2013, but last year, we apparently agreed to a deferral and the principal will now be repaid from 2020 and despite all of Greece’s woes we might see it back and we haven’t agreed to a write-down.
We have however received €25.96m in interest from Greece on our loan since 2010. You might recall Minister for Finance Michael Noonan recently reducing economic links between Ireland and Greece to including feta on the weekly shopping list. €25.96m in interest and an outstanding principal of €345.7m – that’s a lot of feta!
The information was revealed in the Dail yesterday in a parliamentary question by the Sinn Fein finance spokesperson Pearse Doherty, responded to by Minister Noonan. This is the full exchange (with emphasis added).
“Deputy Pearse Doherty: the contribution made by the State to the first bailout in Greece in 2010; the way this contribution was accounted for in the deficit and national debt figures; the amount of interest received by Ireland from this contribution; when the sum is due for repayment by Greece to Ireland; if he will provide an assessment of the prospects for the repayment of the contribution; if any provision will be made for any non-repayment in our national accounts..
Minister for Finance, Michael Noonan: Under the Euro Area Loan Facility as agreed for Greece in May 2010, stability support in the form of a joint Euro area/IMF financing package of €110 billion is being provided to Greece over a three-year period.
Ireland contributed €345.7 million (net of a 50 basis points service charge) in respect of the first two tranches of the loan in 2010. Ireland withdrew from participation in the facility when we entered the EU/IMF Programme of Financial Support.
This amount was accounted for as a loan under non-voted capital expenditure.
Interest payments on the loan in respect of Ireland’s contribution to the facility are due quarterly and are calculated on the full nominal amount of the loan (i.e., including the 50 basis points service charge). The original loan agreement provided that the principal would be repayable quarterly over two years starting in 2013 and that the rate of interest, which is variable, would be based on three-month EURIBOR (the average rate at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone) plus a margin of three hundred basis points (3 percentage points) for the first three years and four hundred basis points subsequently. However, the lending countries agreed in 2011 to extend the grace period and term of the loans and to reduce the margin in the interest rate charged to Greece to 100 basis points (one percentage point). As a result, the principal on Ireland’s loan to Greece is due to be repaid over five years beginning in June 2020.
The total amount of interest received by Ireland on the loan to date is €25.96 million.
As the Deputy will be aware, Greece came to an agreement with its private sector creditors in March 2012 which allowed it to restructure debt held by banks and other private investors. However, that restructuring and the consequent losses for investors did not apply to loans under the Euro Area Loan Facility under which Ireland provided a loan to Greece in 2010.”