The Government has secured "political agreement" from euro zone finance ministers to repay most of its IMF loans back early, according to the Minister for Finance.

Speaking in Milan, Michael Noonan said he had secured "unanimous agreement" from euro zone finance ministers to start the process of replacing up to €18bn in IMF loans with funding from the international markets.

The new loans would almost certainly carry a much lower interest rate than the 5% charged on the IMF loans.

Mr Noonan said that he still had to make the case to all 27 EU finance ministers at the informal Ecofin meeting tomorrow, but he added that the necessary procedures could now be put in place by euro zone officials.

Irish sources say that once all 27 governments - including some national parliaments - formally approve the decision, then the process to start raising bonds on the international markets can begin, "probably before the end of the year."

Mr Noonan has also said that the interest savings derived from paying the loans early could have an impact on calculations for the upcoming Budget.

The Government has lobbied EU and euro zone officials on the issue because of a legal clause in the bailout which requires the various rescue creditors to be repaid at the same time.

As part of the EU/IMF bailout package, Ireland obtained bilateral loans from a number of countries, including a €600m loan from Sweden, which holds elections on Sunday.

Meanwhile, Taoiseach Enda Kenny has said that he expects movement before Christmas on the issue of Ireland beginning to repay the majority of IMF loans back early.

Mr Kenny also said he did not expect there would be a difficulty with Ecofin.

ECB notes decision to pay back loans early

The president of the European Central Bank, Mario Draghi, has said the ECB "took note" of the decision by the Government to repay its IMF loans early and of the political agreement reached by euro zone finance ministers.

But he also again raised concerns about the legacy of the Anglo Irish Bank promissory notes.

At a news conference following the meeting of euro zone finance ministers in Milan, Mr Draghi said there was a "separate discussion" on how the Government was handling the Anglo Irish promissory notes issue.

When asked about concerns over the speed with which the Irish Central Bank was selling bonds that replaced the promissory notes, Mr Draghi said: "Our reaction was also to remark that there is a separate discussion on how to handle the legacy of the IBRC in a way that shouldn't raise monetary financing concerns on our side."

RTÉ News put to Mr Draghi the Government's stated view that the speed with which the bonds were sold was a matter for the Central Bank, which was an independent institution, and not the Government, Mr Draghi replied: "That is also part of the discussion."