The Department of Finance has this afternoon published the Memorandum of Understanding for the IMF/EU bailout here (page 68 onwards). The MoU seems to have been removed by the Department of Finance in Ireland so the link is to the IMF version of the document.
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Hmm, the IMF rate is 5.7%?
I, like you, thought it was no more than 4%?
I was expecting to find the rates set out in the consolidated statement issued yesterday (analysis now complete and am composing an entry to go up shortly) or the ministerial statement. However I think the rates only appear in the NTMA statement from yesterday (link at bottom) which says: “IMF: 5.7 per cent per annum: The IMF lending is denominated in the Fund’s unit of account, Special Drawing Rights (SDRs). The SDR comprises a basket of four currencies, Euro, Sterling, the US Dollar and Japanese Yen. The IMF’s SDR lending rate is based on the three month floating interest rates for the currencies in the basket. In the presentation of the financial support programme the interest cost on the IMF’s floating rate SDR lending is expressed as the equivalent rate when the funds are fully swapped into fixed rate Euro of 7.5 years duration. This expresses the interest rate in terms which can be compared with the cost of borrowing from the EU sources.”
Yes that is at odds with what I understood from the IMF statement (link at bottom which states): “At the current SDR interest rate, the average lending interest rate at the peak level of access under the arrangement (2,320 percent of quota) would be 3.12 percent during the first three years, and just under 4 percent after three years.”
NTMA Statement on rates – http://www.ntma.ie/Publications/2010/TechnicalNoteOnEUIMFProgrammeBorrowingRates.pdf
Irish Times article on bailout rates – http://www.irishtimes.com/newspaper/ireland/2010/1202/1224284574603.html
IMF Statement on Ireland – http://www.imf.org/external/np/sec/pr/2010/pr10462.htm