Government to earn £440 million on Ireland loan

A bilateral emergency loan to Ireland will not add to Britain's fiscal deficit and will earn the public coffers 440 million pounds in fees and interest, finance minister George Osborne said on Wednesday.

Britain has offered Ireland a loan of around 3.25 billion pounds as part of its seven-billion-pound contribution to an international bailout for the struggling euro zone country.

"If Ireland takes out all the loan that is being made available to them, pays it back with the interest that has been forecast, then they would pay us 440 million pounds in terms of fees and interest," Osborne said during a parliamentary debate.

The Chancellor said earlier that final details of the loan had been agreed early on Wednesday, and that in the Treasury's view it offered "value for money."

The Loans to Ireland Bill was passed by the lower chamber of parliament and now goes to the upper chamber for further discussion.

Ireland is a major trading partner for Britain, which is a member of the European Union but not the euro bloc.

Osborne said the loan could be adjusted slightly to reflect foreign exchange moves, but not increased substantively unless the government sought the agreement of parliament beforehand.

"I have no intention at the moment of doing that," Osborne said.

Osborne said the loan would be divided into eight tranches, each of which must be repaid in full after 7.5 years.

He said the convention was for multilateral loans to rank senior to bilateral loans, but reassured parliamentarians that the interest rate charged had taken that into account.

Source: http://uk.news.yahoo.com/