Last of Ireland’s UK bailout loans repaid but debt keeps rising

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March 26 2021 04:25 PM

Ireland has made the final repayment in £3.23bn of emergency loans provided by the UK government as part of the 2010 bailout.

The loans were announced back in 2010 and were provided to Ireland in £403m payments from 2011 to 2013, with each tranche repayable after 7.5 years.

When the bailout deal was announced, the UK, Denmark (€400m) and Sweden (€600m), as non euro members, agreed to make direct loans to Ireland as their bailout contribution. Euro area countries made their loans through the euro bailout funds.

Including the UK debt four of the six loans that made up the bailout package have now been repaid, including IMF loans that had carried interest costs far in excess of what Ireland could refinance them for from 2014.The Swedish and Danish loans were also repaid early.

However, in cash terms the biggest share of the 2010 bailout is still outstanding, the roughly €40bn owned to the euro area rescue funds; the EFSF and EFSM. It will be decades before those, now low interest loans, are repaid.

Refinancing of older loans on the bond market and running the exchequer at a deficit for most of the past decade means the national debt has increased even as individual elements of the bailout were paid back. The debt was €215bn in 2012, at the peak of the euro crisis and had climbed to €225bn by the end of February 2021.

The European Commission has forecast that Ireland will have total government debt of €241.6bn by the end of this year and the highest debt per person in the EU.

Unlike the IMF and Swedish and Danish loans Ireland did not look to repay the UK rescue loan early, because it would have triggered an early repayment fee.