The International Monetary Fund has said Ireland can pay back its loans to the Fund early to avoid paying high interest rates and surcharges.
In a letter to Fianna Fáil Finance spokesman Michael McGrath, the IMF mission chief for Ireland, Craig Beaumont, said the IMF accepted early payment of credit with no fee or charge.
He cited the recent examples of Latvia, Hungary and Iceland.
Ireland is currently paying a blended rate of 4.99% on the IMF portion of its Troika loans, which includes a surcharge for borrowing above our IMF loan quota.
Under the Troika agreement, if Ireland makes an early repayment on its IMF loan, it also must make an equivalent repayment on its EU borrowings.
However, the EU borrowings are at a lower interest rate, which means the requirement to repay all the loans at the same pace would wipe out any benefit from the early repayment of the IMF portion of the borrowings.
Some estimates put the possible annual saving in excess of €300m, but it would require the consent of the all lenders under the Troika programme.
"The IMF's confirmation that Ireland may repay its loans to the Fund early without any penalty opens up the possibility of a very significant annual saving for the State and every effort must be made now to achieve this," Mr McGrath said.
"Given the benign borrowing conditions at present, the €20 billion cash stockpile held by the NTMA and the fact that we are paying almost 5% on the IMF loans, it makes perfect sense for the government to pursue this issue."
Speaking on RTÉ News at One Mr McGrath said there is a very strong argument to be made by the Government to convince Ireland's European partners to allow the state make an early repayment of the debt.
Mr McGrath said Ireland could borrow on the international markets at a rate of about 2.3%, allowing expensive debt be replaced with cheaper debt, allowing for a potential saving of over €400m.
Meanwhile, Economist Colm McCarthy has said he does not believe it is realistic to talk about saving €400m per annum by making an early repayment of debt owed to the IMF under the Troika bailout.
Earlier, Fianna Fáil Finance spokesperson Michael McGrath said Ireland could borrow on the international markets at a cheaper rate than the interest rate paid on IMF debt, and effectively replace the more expensive debt with cheaper debt, allowing for a potential saving of over €400m.
However, speaking on RTÉ's Drivetime Mr McCarthy said it was not clear that the Government could sell €22.5bn worth of bonds at any price.
Mr McCarthy said the loan agreements with the European lenders contained a provision that the state could not pay off the IMF without their permission.
He said as far as he was aware no country had been allowed to pay off the IMF in advance of paying off the European lenders.