The International Monetary Fund has said Ireland can repay its bailout loans early without penalty.

In a letter to Fianna Fáil finance spokesman Michael McGrath, the IMF’s mission chief for Ireland, Craig Beaumont, said no penalty fee or conditionality would apply if Ireland decided to pay back its outstanding IMF loans early.

“Ireland can decide to repay its outstanding IMF credit early, including based on considerations of interest rate differentials and their potential budgetary implications,” Mr Beaumont said.

He added that several countries including Latvia, Hungary and Iceland, have repaid their IMF debt ahead of schedule in the past.

Document: IMF letter to Michael McGrath

Under the bailout programme, Ireland has borrowed €22.5 billion from the IMF, at a blended average interest rate of 4.99 per cent. Mr McGrath said this rate is about twice the cost of borrowing on the markets at the moment.

“Given the benign borrowing conditions at present, the €20 billion cash stockpile held by the NTMA and the fact that we are paying almost 5 per cent on the IMF loans, it makes perfect sense for the government to pursue the possibility of repaying the loans early”.

Mr McGrath said it is “in everyone’s interests” that Ireland’s debt position is made more sustainable and that this annual saving is achieved for the benefit of Irish taxpayers.

“The Minister for Finance has himself said that repaying €15 billion early to the IMF could save up to €375 million annually,” he added.

Speaking at the launch of the National Treasury Management Agency’s annual report last month, Mr Noonan said Ireland would look to refinance about €15 billion of this, in three tranches of €5 billion over the next 18 to 24 months.