Ireland has cut the cost of its bailout loans by €1.1 billion after Europe offered to lend some of the money at cost price.
Finance minister Michael Noonan said the saving is further evidence that the Irish government was "delivering on commitments" to get a more credible deal on the EU/IMF rescue package. Taoiseach Enda Kenny said the reduced costs were "of genuine benefit to the country."
The European Commission revealed a special fund being tapped for €22.5 billion is slashing top-up interest charges and offering the money at the same price it paid to borrow. That gesture will save about €650 million a year on paper.
The saving is on top of an interest rate cut of about two per cent, yet to be finalized, on another swathe of the €85 billion package backed by euro-zone states.
Mr. Noonan said the combined cuts in borrowing from the European Financial Stabilization Mechanism (EFSM) and the European Financial Stability Facility (EFSF) could total €1.1 billion.
However, the final charges are likely to change depending on whether all of the bailout is drawn down, how long it takes Ireland to repay, and what rates are charged for borrowing individual tranches of the package.
The same deal offering cost price loans from Europe under the EFSM has been given to Portugal. Under the new arrangement, Ireland has also been given up to 30 years to repay these debts to the EFSM.
The cost-price deal will also be applied to the entire EFSM package, including the three tranches of loans already paid - €5 billion euro in January, €3.4 billion in March, and €3 billion in May.
