THE interest rate Irish citizens will repay the €85bn EU-IMF loans will start at 5.5% and may rise as high as 7.5%, the Sunday Tribune understands. But the effective mortgage repayments will be stretched over longer than three years, possibly as long as nine years, to ease the huge burden of meeting the annual interest bill in any one year.
Even though the unencumbered €18bn assets in the National Pension Reserve Fund will be pledged, the Irish bailout will nonetheless be costlier than the 5.2% average annual rate Greece has been paying since May to tap its €110bn bailout over three years.
Recriminations about today’s expected announcement on the deal are already starting – leading European economist Gabriel Stein of London’s Lombard Street Research told the Sunday Tribune this weekend that he is not holding euro bank notes issued by Greece because of rising fears that the Irish and Portuguese crises will intensify.
Experts say that the bailout terms will again put the spotlight on finance minister Brian Lenihan’s decision to protect most senior bond holders. Ben May, European economist at Capital Economics, said that the bailout costs and the scale of the crisis will lead to Ireland failing to pay back on all its sovereign debts.
Other senior sources linked to the Irish bond market this weekend said that Ireland had “thrown away” its public sovereignty to protect private holders of senior bond holders in Anglo Irish and other scandal-ridden banks.
“Even if bank bond holders were made to pay in September and October, the sovereign could have been saved,” said one of the most knowledgeable market experts on Irish policy, speaking on the basis of anonymity.