EU 3% margin may cost €5bn

ON one segment of the EU/IMF loan to be voted on today, the EU is charging a margin of almost 3% on top of the interest rate, which could cost the country up to €5 billion.

According to RTÉ news, Ireland’s representatives on the European Court of Auditors said that there is “no precedent” for the EU charging a margin on such loans.

The bailout money for Ireland comes in three parts: the IMF, the European Financial Stability Facility and the European Financial Stability Mechanism.

The last of these is effectively EU money whereby the European Commission raises cash on the international markets and lends it to Ireland.

The mechanism is based on Article 122 of the EU treaties which speaks of helping member states in “serious difficulties caused by… exceptional occurrences outside its control.”

Other countries such as Latvia, Romania and Hungary have been lent money under a similar arrangement. However, unlike these countries, as well as an interest rate, Ireland is also being charged a margin of nearly 3% that could amount to up to €5bn.