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IOU

Have €42,500? That's the amount of public debt hanging over the head of every person living in the State

Minister Paschal Donohoe said prudent management of the public finances in needed.

IRELAND’S PUBLIC DEBT rose to €206 billion last year, an increase of €5 billion, according to a government report published today. 

The annual report on Public Debt states this is the equivalent of €42,500 for every person living in the State, one of the highest in the OECD.

The national debt is about four times what it was before the recession. 

The Department of Finance has stated that “prudent fiscal policy” is needed, as well as structural reforms, such as raising the level of employment and reducing barriers to the labour supply.

The report notes that active debt management has reduced the interest bill on Irish debt, but the annual interest bill continues to represent a significant operating cost for the State at €5.2 billion last year.

The interest payment is equivalent to nearly all of last year’s capital budget, with the department stating that reducing the level of debt would “free-up” resources to be used in areas that could bring long-lasting benefits to citizens.

The report will be no surprise to government due to the CEO of the National Treasury Management Agency (NTMA) CEO Conor O’Kelly telling an Oireachtas committee last month that Ireland has paid €60 billion interest on its national debt over the last 10 years.

He also said the chances of a recession in Ireland are 100%.

Speaking about the “mountain of debt” Ireland has, the NTMA boss said in July that there “is only one way to get down a mountain – very carefully and very slowly. It will only happen slowly”. 

The latest debt report notes that Ireland’s debt path is shown to be “highly sensitive to any shocks to economic growth”.

The sustainability of the public finances will face significant challenges from the projected ageing of the population over the coming decades, adds the report. 

The NTMA has also stated that there being “external risks on the horizon”, stating that foreign capital Ireland borrows comes from investors who are all overseas, which the agency classed as “unusual”. 

“They can change their mind… they can charge you more… we are quite exposed,” said the NTMA CEO.

Finance and Public Expenditure Minister Paschal Donohoe said the analysis illustrates the importance of prudent management of the public finances.

He said public indebtedness remains too high, adding that “it is crucial that we build on the solid progress made in recent years and run budget surpluses to prevent the build-up of additional debt”. 

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