Ireland will have to pay fee if it seeks credit line

Ireland would have to pay a non-negotiable fee to request a precautionary credit line, an EU official said, even if it did not need the money eventually.

All indications from the Government are that it will not ask for this line of credit as a guarantee when exiting the bailout programme next month.

An official said that EU institutions would be surprised now given all the statements from the Government if they now asked for a credit line.

While a fee was setting up a line of credit from the EU’s rescue fund, the ESM, has not been established yet, such fees are normally between 0.1% and 0.5%.

This would lead to a fee of €10m-€50m for a €10bn loan as mentioned by Finance Minister Michael Noonan. Interest would be charged on top of that only if the money was drawn down.

“It is not as though someone is handing you a free lunch on a plate — it comes with a price tag attached,” he said.

“Fees have to be paid whether the money is drawn or not — just for the pure joy of having a precautionary credit line ... if the call comes you need to have the money sitting there.”

There would also be conditions imposed similar to those from the troika, together with three-monthly inspections for the term of the credit line, which would be between one and two years.

While Ireland is not expected to make public any decision on a credit line for some weeks, eurozone finance ministers are expecting to hear an update “about the way forward” from Mr Noonan at their meeting tomorrow, together with the results of the final troika mission to Dublin.

If the Government was to make a request it would take some time as it would require agreement by all ministers and the ESM would also have to make the arrangements to have the money in reserve in case the Government called on it.

Spain borrowed money for its banks, but is expected to make a clean exit — without looking for any further aid.

However, there is no indication that Greece will receive its latest bailout installment as the government and troika cannot agree on a number of issues, including whether the planned budget will leave a shortfall of just €500m according to the government, or up to €3bn, according to the troika’s calculations.


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