Borrowings of extra €3bn a year for next 15 years

THE Government will need to borrow an extra €3 billion per annum on top of its normal borrowing requirements over the next 15 years, in order to repay debt used to bail out Anglo Irish Bank, Irish Nationwide and EBS, the Dáil’s Public Accounts Committee (PAC) was told yesterday.

The €3bn relates to the promissory note (which allows payments to be made over time) investment in the failing institutions, which will be paid in equal installments over the next number of years. As the banks in question are showing the full value of the notes in their accounts — for capital adequacy purposes — and the cash isn’t being paid upfront; interest must be paid so that the money can be accurately valued on the accounts. The interest rate — currently estimated at around €700m for this year and €1.5bn for 2011 — is based on the current 10-year Irish Government bond yield.

A group of representatives from the Department of Finance — led by secretary general Kevin Cardiff — also told the latest sitting of PAC that the final tranche of NAMA-bound loans from Anglo (into which the Government has pumped more than €29bn) are on course to be transferred before the end of October; and should move by the end of the weekend.