Ireland cleared to pay IMF loans early after Swedish vote

Reuters

STOCKHOLM (Reuters) - The Swedish parliament on Wednesday said Ireland may pay back part of its bailout loans early to the International Monetary Fund, giving the final EU approval needed for Dublin to begin repayment.

Ireland won agreement from Europe to pay the IMF before it repays aid from the European bailout funds and just needed the new Swedish government to ratify the amended terms in parliament before the deal is fully signed off.

Ireland wants to replace the more expensive IMF loans with cheaper market funding to reduce the carrying cost of a national debt that ballooned to 110 percent of annual output this year after the economy and its banking sector crashed.

The country's debt agency raised 3.75 billion euros (3 billion pounds) in 15-year debt earlier this month ahead of the formal ratification, taking advantage of low interest rates to sell the bonds at a record-low yield of 2.49 percent.

The government has estimated that it will save around 1.5 billion euros on debt-servicing costs over the next five years by refinancing 18.3 billion euros of its IMF loans, and had planned to do so in three equal tranches between now and 2016.

However, a source familiar with the process said it was now likely that this would be done in two tranches rather than three and that a first repayment of 9 billion to 10 billion euros would be made after ratification from the Swedish parliament.

Ireland, which is fully pre-funded to the end of 2015 after resuming regular bond auctions this year, has also built up substantial cash buffers, which it plans to reduce and which will be used to cover the remainder of the refinancing, the source said.

(Reporting by Simon Johnson, writing by Padraic Halpin in Dublin)