The ad hoc quota increases under the Quota and Voice Reforms of the International Monetary Fund (IMF), (agreed back in 2008), include a 50 percent increase in Ireland’s IMF funding quota (along with 53 other countries around the world).
So we now have 30 days to pay for that quota increase.
Once paid up, Ireland’s quota at the IMF will increase from SDR 838.4 million to SDR 1,257.6 million or SDR 419.2 million = €477 million. That’s the bad news – we gotta come up with cash.
But, the good news is that with the new higher quota, “Ireland’s access to Fund resources under the Extended Fund Facility arrangement is reduced to 1,548 percent of quota, compared with 2,322 percent originally”. Note – countries shouldn’t really borrow at more than 300% of the quotas, but Ireland’s ‘bailout’ was at a massive 7.5 times that rate.
The new quota, therefore, “reduces the share of Ireland’s credit that is subject to surcharges, which are due on amounts in excess of 300 percent of quota. Based on the current SDR interest rate of 0.43 percent, the average lending interest rate at the peak level of access under the arrangement will be 3.04 percent on credit outstanding less than three years (down from 3.17 percent), and 3.85 percent on credit outstanding longer than three years (down from 4.04 percent). This reduction in average interest rate is the result of the implementation of existing Fund policies under the agreed increase in quotas and not of a change in policy."
So basically we have 13bps shaved off our loans with IMF which will save us 13bps on €22.5bn loan (3-year facility) or €29.25 million in annual interest rate. Excitement, folks, is never ending… even Lorcan was wrong on this one - we are to pay 477 million to save (over 3 years) the grand total of 87.75 million.
And there’s more to come: “The proposed quota increase under the 14th General Review of Quotas, which is expected to be effective by the time of the 2012 IMF-World Bank Annual Meetings, includes a further 174.3 percent increase in Ireland’s quota to SDR 3,449.9 million. This would tend to further reduce the average lending rate when it comes into effect.
Can’t wait… we can borrow that money from IMF as well, to pay IMF to increase the quota, so as to save a penny on a million?..
Granted, this was agreed ages ago, but...
Here's the note: