The Government is to seek early repayment of €5.5 billion of loans taken under its 2010 EU-IMF bailout.

It hopes to save around €150m by refinancing the money at cheaper rates, the Minister for Finance and Public Expenditure and Reform Paschal Donohoe said today.

Minister Donohoe said the Government intends to repay early - and in full - its €4.5 billion International Monetary Fund loan. 

Bilateral loans from both Sweden and Denmark will also be repaid. These amount to €600m and €400m.

The interest savings from these early repayments are estimated to be about €150m over the remaining lifetime of the loans.

Minister Donohoe said he would not seek early repayment of a British bilateral bailout loan - worth €3.8 billion - as its fixed terms would not allow for any savings.

He said the loan from Britain had a provision which was similar to a "break clause". 

The Minister said it would not be in Ireland's economic interest to repay the loan early. 

He added that Brexit was "not a factor" in the decision not to repay the loan to Britain.

Improving debt sustainability

Minister Donohoe said that officials from his department and the National Treasury Management Agency had been examining ways to improve the country's debt sustainability.

He said early repayments of the loans will improve the country's debt sustainability, provide liquidity benefits and increase the ECB's purchase capacity for Irish bonds in its quantitative easing programme.

"These early repayments - in particular the early IMF repayment - will mark another very significant milestone for Ireland as we move forward, signalling the strength of our economy and sovereign funding position generally," the Minister said.

Early repayments of the loans will require agreement from the country's European lenders and Mr Donohoe said he will begin formal talks with the country's EU partners on the necessary waivers.

Minister Donohoe also said he has been in contact with the IMF Managing Director Christine Lagarde who has confirmed her support for the early repayments. 

Speaking on RTÉ's News at One, Mr Donohoe said that the decision to repay the loans sooner is a "signature development" in showing Ireland's ability to repay its debts. 

He said that Ireland can now borrow money more cheaply on the markets and use this to repay IMF loans sooner, saving €150m.

The likely saving made from this approach would not overtly affect the forthcoming Budget spending decisions, the Minister added, saying the magnitude of the saving will not become clear until later in the year.

He said key to Budget 2018 is ensuring Ireland balances the books in "a very risky world, as this is key to keeping our people safe into the future".

A total of €67.5 billion was loaned to Ireland under the EU-IMF programme in 2010. 

The National Treasury Management Agency said today that from a funding perspective, there is no immediate effect as the proposal is at request stage. 

"Early repayment of the loans requires agreement from our European lenders to waive the proportionate early repayment clauses in our respective loan agreements," a statement from the agency said.

"Replacing Ireland's loans from the IMF, Sweden and Denmark further reduces our debt service costs, which have declined considerably in recent years," the NTMA's director of funding and debt management, Frank O’Connor. 

Mr O'Connor said that the NTMA has previously implemented arrangements to repay over €18 billion in IMF facilities to take advantage of reduced market borrowing costs and create savings for the Exchequer. 

"The Exchequer is in a healthy funding position. At end-August we had €20 billion in cash and liquid assets," he added.

The ECB cut its monthly purchases of Irish bonds earlier this year after nearing a self-imposed limit of holding 33% of any country's debt, a pressure Ireland can help alleviate by issuing new eligible debt.