On 28 November 2010, the Irish Government agreed in principle to the provision of €85 billion of financial support to Ireland by Member States of the European Union through the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism; bilateral loans from the UK, Sweden and Denmark; and the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) on the basis of specified conditions.
The Irish State’s contribution to the €85 billion facility will be €17.5 billion, which will come from the National Pension Reserve Fund (NPRF) and other domestic cash resources. This means that the extent of the external assistance will be reduced to €67.5 billion.
The external support will be broken down as follows:
- €22½ billion from the European Financial Stability Mechanism (EFSM)
- €22.5 billion from the International Monetary Fund (IMF
- €22.5 billion from the European Financial Stability Fund (EFSF) and bilateral loans. (The bilateral loans will be subject to the same conditionality as provided by the programme)
The facility will include:
- up to €35 billion to support the banking system (€10 billion for the immediate recapitalisation and the remaining €25 billion will be provided on a contingency basis.
- Up to €50 billion to cover the financing of the State.
The funds in the facility will be drawn down as necessary, although the amount will depend on the capital requirements of the financial system and NTMA bond issuances during the programme period.
If drawn down in total today, the combined annual average interest rate would be of the order of 5.8% per annum. The rate will vary according to the timing of the drawdown and market conditions.
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