The European Commission today criticised "inaccurate reporting" and denied there were any "abusive charges" on financial aid to Ireland.
This morning, Labour Party leader Eamon Gilmore said the union was making a profit of 3 per cent on the loan to Ireland.
However, the Commission insisted that the rate being charge on the €22.5 billion fund was preferential, and said any charges had been agreed by member states earlier this year.
"The average interest rate on EU funds is set up to be the equivalent to IMF lending conditions. The European Financial Stability Mechanism (EFSM) includes a surcharge to provide loans at the same interest rate as the IMF. That was the political agreement between all member states, including Ireland, last May," the Commission said in a statement.
The Commission compared the difference between the IMF and EFSM pricing as the same as between a mortgage at a variable or at a fixed rate. It said the rate was calculated on November 22nd, the day the EFSM went to market, at a cost of just below 3 per cent with a 2.92 per cent surcharge for a seven and a half fixed-term loan.
"If you translate the IMF floating rate for a seven and a half fixed-term loan, it comes in at close to 5.7 per cent," it said.
"The borrowing cost or surcharge was agreed by all member states, including Ireland, last May. It is there to incentivise a return to the normal market and to disincentivise governments who fail to take action to address their deficits," it said.
The commission said making comparisons with aid given to non-euro states, known as Balance of Payments support, was not relevant because the support was not set up to be the equivalent of IMF conditions.
"Of the two portions of EU aid, one, the EFSM goes back to the EU budget and reduces Member States contributions, including Ireland’s, to the EU budget. The other portion, the EFSF stays as a cash buffer and only goes back to the member states, including Ireland, when the last loan has been fully repaid," the Commission said.
