Ireland on Friday repaid a significant part of its debt to the International Monetary Fund (IMF) four years early, with a total of 3.5 billion euros ($3.9 billion), according to media reports. Friday’s payment comes shortly after the formerly troubled nation paid 9 billion euros ($10 billion) in December.
Ireland, which initially borrowed 22.5 billion euros ($25.5 billion) from the IMF, has to repay a reduced debt of 18 billion euros ($20 billion).
Finance Minister Michael Noonan said the remaining 5.5 billion euros ($6.2 billion) will be paid in the coming months. "The early repayment plan will result in interest savings in excess of 1.5 billion euros over the lifetime of the loans," Noonan said in a statement, Agence France-Presse reported.
"Lower rates lead to lower interest bill on the national debt thus reducing the amount of tax revenues and borrowing that go towards financing the debt," he added.
The National Treasury Management Organization (NTMA), which oversaw the transaction, confirmed that the latest payments fulfilled all of Ireland’s obligations until mid-2019, the Irish Times reported. “Subsequent early repayments, planned for 2015, will target later scheduled repayment dates up to January 2021,” the NTMA said.
Ireland’s economy has performed very well since it left the bailout program governed by the European “troika” model, consisting of the European Union, the IMF, and the European Central Bank, with yields on its debt now at record lows.
A study by consulting firm McKinsey confirmed that the rate at which Irish households cut debts was greater than all other countries measured, the Irish Times reported.
The European Commission forecast for Ireland also improved this week, with the revised growth figure at 3.5 percent for 2015, the highest projected rate in the European Union.