Euro zone may discuss early Irish bailout repayment to IMF

BRUSSELS Sat Jul 26, 2014 7:37am EDT

(L-R) International Monetary Fund (IMF) Managing Director Christine Lagarde, Ireland's Finance Minister Michael Noonan and Italy's Economy Minister Fabrizio Saccomanni attend an euro zone finance ministers meeting in Brussels July 8, 2013. REUTERS/Francois Lenoir

(L-R) International Monetary Fund (IMF) Managing Director Christine Lagarde, Ireland's Finance Minister Michael Noonan and Italy's Economy Minister Fabrizio Saccomanni attend an euro zone finance ministers meeting in Brussels July 8, 2013.

Credit: Reuters/Francois Lenoir

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BRUSSELS (Reuters) - Euro zone finance ministers are likely to discuss in September whether to allow Ireland to repay its more expensive bailout loans from the International Monetary Fund before paying back the euro zone bailout fund, a euro zone official said.

When it was cut off from the markets in 2010, Ireland borrowed from the IMF, as well as the European Financial Stability Facility and the European Financial Stability Mechanism a total of 67.5 billion euros.

The loans for the IMF, which amounted to one third of the total, are more expensive than the European ones and Ireland now can borrow more cheaply on the market.

Dublin therefore wants to repay the IMF loans first to cut servicing costs. But under the bailout deal early repayments have to be done proportionately to all creditors, not only one.

But this could be changed if euro zone finance ministers agreed to waive their right for early repayment at the same time as the IMF and some diplomats said the political willingness to help Ireland with its debt load could be there.

"This is a question the euro area finance ministers could look at in September," said a spokesman for the European Stability Mechanism, the euro zone bailout fund.

(Reporting By Jan Strupczewski, Editing by Angus MacSwan)

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