Not surprisingly, the opposition Ireland is already out slamming the latest Irish bailout deal.
This is from Labour Party leader Eamon Gilmore:
This deal announced this evening with the EU and the IMF is a national sell out that will leave the citizens of this country with a crippling level of debt for years to come, while the majority of the international bondholders are required to make no contribution at all.
The rate of interest accepted by Fianna Fail is penal and is significantly in excess of the rate that Greece was required to pay. The Irish people will now have to come up with annual interests payments amounting to billions of Euro.
On the matter of the interest rate, that’s true, but…
Jamie Coleman at ForexLive thinks it’s actually much better for Ireland because it’s a 10-year loan deal:
The terms of these bailouts went from being quiet punitive in the case of the original Greek terms (three years) to pretty cushy in the case of Ireland (10 years). Portugal will probably get 20 years to repay when they inevitably come calling…
Here’s the relevant paragraph from the official IMF announcement:
The choice of an EFF offers Ireland a facility with a longer repayment period, with repayments to the Fund starting after four and a half years and ending after 10 years. The IMF charges member countries a uniform interest rate on nonconcessional loans, which is a floating rate based on the SDR interest rate, which is updated weekly. (The SDR interest rate is a weighted average of yields on three-month Treasury bills for the United States, Japan, and the United Kingdom, and the three-month Eurepo rate.) For amounts up to 300 per cent of quota, the lending interest rate is currently 1.38 per cent, while the lending rate on amounts over 300 per cent of quota includes a surcharge that is initially 200 basis points and rises to 300 basis points after three years. At the current SDR interest rate, the average lending interest rate at the peak level of access under the arrangement (2,320 per cent of quota) would be 3.12 per cent during the first three years, and just under 4 per cent after three years.
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