The Financial Secretary to the Treasury (Greg Clark)
I would like to update the House on the loan to Ireland.
Ireland completed the seventh quarterly review of its International Monetary Fund and European Union programme of financial assistance on 13 September 2012, following which, the utilisation period for the fifth instalment of the UK bilateral loan began.
Upon request, the Treasury disbursed the fifth instalment of £403.37 million on 19 October 2012, with a maturity date of 20 April 2020.
The interest rate charged on the loan is calculated as set out in the loan agreement as the UK’s cost of funds plus a service fee of 0.18 basis points per annum, creating an effective per annum interest rate on this tranche of the loan of 2.372%. The UK more than covers its cost of funds.
The Treasury will provide a further report to Parliament in relation to the bilateral loan as required under the Loans to Ireland Act 2010 as soon as is practicable following the end of the next reporting period, which ends on 31 March 2013.
The Government believe that it is in our national interest that the Irish economy is successful and its banking system is stable. The Government continue to support Ireland’s efforts to improve its economic situation.