Does 5% IMF rate = a quarter of our Tax income ?

Bill D Gallows

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Listening to Vincent Browne tonight, all of the economists seem to be saying that if the bailout fund is of the order of 80 Billion Euro, then if the interest rate on this loan is 5%, the interest payments alone will be around 25% of Ireland's total tax take.

Is this true ?

If this is indeed the case, then today's Budget is a complete sideshow, which will be dwarfed by the IMF repayments.

I don't want to be alarmist if my understanding on this is wrong, but if its true, we really are being sold down the river by a treasonous government who are capitulating rather than fighting for us.

If I'm wrong, then I'll retract my remarks, so what's the truth here ?
 


Dreaded_Estate

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According to government projections interest payment will be 20% of tax revenue by 2014.

But this doesn't factor in higher than assumed rates from the EFSF/IMF or actual additional recapitalizations.

If we need another €15bn for the banks and have to pay 6% interest on the money then total interest payments would be about 24% of tax revenue.
 

kerdasi amaq

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Interest on €1 @ 5% for one year = 5c

Total interest paid after 20 years with no capital repayment; 20 x 5 = €1

After 20 years the total sum of interest paid equals the initial loan. wow.
 

Republican-Socialist

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Surely we are going to default at this rate? Does the IMF negotiations not make this budget totally irrelevant as the scale of our problems down the line are much worse.
 

joenitka

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and thats also based on the country growing by 1.something % next year and 2.something % the few years after right ?

THe way we are heading it could be minus growth... Is that factored in ? or would that be too resonable to expect.
 

eoghanacht

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and thats also based on the country growing by 1.something % next year and 2.something % the few years after right ?

THe way we are heading it could be minus growth... Is that factored in ? or would that be too resonable to expect.
The penny drops.

All this is built on is the assumption that there will be continous growth for the next 5 yrs atleast.

It's never going to happen
 

joenitka

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The penny drops.

All this is built on is the assumption that there will be continous growth for the next 5 yrs atleast.

It's never going to happen
I was just stating the obvious... I have been saying that to people at work at they look at me like I have 3 heads :)
Just pointing out a major flaw in the FF plan....
 

Squire Allworthy

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Yes for this to be vaguely plausible growth is essential and is that possible with the size of this burden resting on the economy?

Also is this the totality of borrowing needs?
 


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