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According to the Government, the combined annual average interest rate (for the proposed bale package supported by the IMF/EU/ECB) will be of the order of 5.8% per annum. If we exclude the State's contribution of €17.5 billion which is interest-free then the average interest rate on the borrowed €67.5 billion rises to 7.3%.

If correct***, this rate assumes an even chance of Ireland defaulting on the loans. When is the point of the bale out if there is such a high risk of failure?

Letter published in the Irish Times on 30th November 2010.

*** This was subsequently found to be incorrect, the 5.8% rate applies only to the €67.5 billion. However, this rate includes a risk premium of about 3%.

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This page contains a single entry by Brian published on December 1, 2010 8:15 PM.

Reject IMF Baleout of Banks was the previous entry in this blog.

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