Opinion of the European Central Bank of 9 February 2010 on Ireland’s bilateral borrowing agreement with the International Monetary Fund (CON/2010/15)
Date: 2010-02-09
Institutions: European Central Bank
Subjects: International Monetary Fund, Ireland, bilateral agreement, national law, public borrowing

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 February 2010 

on Ireland’s bilateral borrowing agreement with the International Monetary Fund 

(CON/2010/15) 

Introduction and legal basis 

On 27 January 2010, the European Central Bank (ECB) received a request from the Irish Department of 

Finance  for  an  opinion  on  a  draft  law  amending  the  law  on  Ireland’s  membership  of  the  International 

Monetary Fund (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC of 

29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative  provisions1,  as  the  draft  law  has  implications  for  the  Central  Bank  and  Financial  Services 

Authority of Ireland (hereinafter the ‘CBFSAI’). In accordance with the first sentence of Article 17.5 of 

the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

The  main  purpose  of  the  draft  law  is  to  amend  the  law  on  Ireland’s  membership  of  the  International 
Monetary  Fund2  (hereinafter  the  ‘Law’),  to  adopt  and  approve  a  bilateral  borrowing  agreement 

(hereinafter  the  ‘Borrowing  Agreement’)  between  Ireland  and  the  International  Monetary  Fund  (IMF). 

The  Borrowing  Agreement  will  be  entered  into  in  line  with  Ireland’s  commitment  to  comply  with  the 

Presidency  conclusions  of  the  European  Council  meeting  of  19  and  20  March  2009  under  which  the 

Member  States  will  provide  temporary  bilateral  loans  of  EUR  75  billion  to  the  IMF  to  deal  with  the 

international financial crisis. 

As the provision of such additional funds to the IMF is not part of the regular IMF quota, and the Member 

States  will  provide  these  funds  on  the  basis  of  bilateral  borrowing  agreements  with  the  IMF,  new 

legislation is needed for Ireland’s provision of additional funds for the IMF’s activities and to define the 

scope and content of the obligations of the CBFSAI and of Ireland towards the IMF.   

1  
2  

OJ L 189, 3.7.1998, p. 42. 
Bretton Woods Agreements Act 1957 to 1999, published in Iris Oifigiuil Nos 18/1957, 10/1969, 19/1977 and 4/1999. 

 
 
 
 
                                                 
Section  1(b)  of  the  draft  law  inserts  the  Borrowing  Agreement  as  a  new  Schedule  2  to  the  Law. 

Section 1(a)  of  the  draft  law  inserts  a  new  Section  3A  to  the  Law,  pursuant  to  which  the  terms  of  the 

Borrowing Agreement are approved. Under the terms of the Borrowing Agreement, Ireland agrees to lend 

to the IMF on request an SDR-denominated amount up to the equivalent of EUR 1.3 billion on the terms 

and conditions set out in the Borrowing Agreement. Unless otherwise agreed between the IMF and the 

CBFSAI, the loan will be made by way of payments to the IMF by the CBFSAI.   

Section 1(a) of the draft law also inserts a new Section 3B in the Law, pursuant to which the Minister for 

Finance may guarantee, in such form and manner and on such terms and conditions as he or she thinks fit, 

either or both the payment to the CBFSAI of the principal of and any interest on, any money advanced by 

the CBFSAI under the terms of the Borrowing Agreement. 

2. 

General observations 

2.1  On 27 January 2010, the Department of Finance informed the ECB that the draft law was intended 

to  be  adopted  as  a  matter  of  urgency  and,  pursuant to  Article  3(2)  of  Decision  98/415/EC which 

allows for a reduction of the minimum  time limit of one month for the submission of the ECB’s 

opinion in case of extreme urgency, the Department of Finance requested the opinion of the ECB 

on  the  draft  law.  Notwithstanding  Article  3(2)  of  Decision  98/415/EC,  the  ECB  draws  the 

Department  of  Finance’s  attention  to  the  fact  that  the  second  sentence  of  Article  4  of 

Decision 98/415/EC  states  that  the  ECB  must  be  consulted  ‘at  an  appropriate  stage’  in  the 

legislative process. This implies that the consultation should take place at a point in the legislative 

process that affords the ECB sufficient time to examine the draft legislative provisions and to adopt 

its  opinion  in  the  required  language  versions  and  which  also  enables  the  relevant  national 

authorities  to  take  the  ECB’s  opinion  into  consideration  before  the  legislative  provisions  are 

adopted. 

2.2  As recently expressed in other opinions3, the ECB reminds the Department that the tasks performed 

by the CBFSAI must comply with the monetary financing prohibition under Article 123(1) of the 

Treaty which prohibits, among other things, overdraft facilities or any other type of credit facility 

with  the  national  central  banks  in  favour  of  central  governments.  However,  Article  7  of  Council 

Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the 

prohibitions referred to in Articles 104 [now Article 123] and 104b(1) [now Article 125(1)] of the 
Treaty4  provides  that  the  financing  by  the  national  central  banks  of  obligations  falling  upon  the 

public sector vis-à-vis the IMF is not regarded as a credit facility within the meaning of Article 104 

[now Article 123] of the Treaty. Any payment by the CBFSAI of Ireland’s additional obligations to 

the  IMF  provided  for  in  the  Borrowing  Agreement  inserted  into  the  Law  by  Section  1(b)  of  the 

draft law falls within the scope of Article 7 of Regulation (EC) No 3603/93. 

3  

4  

See  ECB  Opinions  CON/2009/100  and  CON/2009/41.  All  ECB  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
OJ L 332, 31.12.1993, p. 1. 

2 

 
                                                 
This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 9 February 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

3