The Government should clear up the confusion about the value to Ireland of the reduction in the interest rate charged on the various elements of funding under the EU / IMF Programme and what impact it will have on Budget 2012, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, ‘The proposal by the European Commission this week to reduce the interest rate charged to Ireland on funds under the EFSM is welcome news, and comes on top of the Eurozone summit decision of July 21st to reduce the interest rate on the EFSF funds.
‘However, different figures have been put forward as to how much money the interest rate reductions on the EFSF and EFSM funds will save Ireland in 2012 and over the remainder of the drawdown period.
‘The Minister for Finance told the Oireachtas Finance Committee on July 26 that the anticipated saving for Ireland in 2012 was €400-500 million. On 1st September, he revised this estimate to €500-600 million. On 9th September, Mr. John Corrigan, Head of the NTMA, told the committee he estimated the saving would be €880 million in 2012. Following this week’s proposal by the European Commission, the Department of Finance has indicated the total saving for Ireland exceeds €1 billion per year.
‘I believe the Minister for Finance should clarify, based on the information available on the interest rate reductions, how much will Ireland save on interest payments in 2012 and in subsequent years. Further, the Minister should make clear what impact this saving will have on the preparation of Budget 2012.
‘The Government is committed to reaching a budget deficit target of 8.6% in 2012 – a position that Fianna Fáil supports. The Government needs to make clear how the saving on interest payments fits into the overall budget arithmetic. People are preparing for a difficult budget but deserve to have the fullest possible information available as to how difficult that budget is likely to be.’